Housing Subsidies and Work Incentives

Abstract

Low-income housing assistance is part of the welfare state of all developed countries. The rest of the welfare state may cause work disincentives. In theory, housing assistance may also do so, but those disincentives may be blunted by its in-kind character and the way it is rationed. Rationing and selection make the estimation difficult; the most rigorous evidence from the United States suggests a loss of 10 to 20 cents in earnings per dollar of assistance. Less rigorous evidence from Australia suggests negative impacts in public housing but not housing benefit, while in Scandinavia researchers have as yet found no long-term duration of dependency.

Keywords: Housing Subsidies, Housing Assistance, Work Disincentives, Rationing, Selection, Comparative International

JEL Classification: R28, I38, H24