Who Benefits from Public Housing?

30 Pages Posted: 22 Dec 2015

See all articles by Essi Eerola

Essi Eerola

Bank of Finland - Monetary Policy and Research Department; VATT Institute for Economic Research

Tuukka Saarimaa

Aalto University - School of Business; Aalto University - School of Engineering

Date Written: 2015

Abstract

​This paper studies how much public housing generates rent savings for the tenants, how these savings are distributed among the tenants, and whether the tenants reside in better quality neighborhoods than similar low-income private rental tenants. Our rent savings estimates are based on a hedonic regression and detailed data on the private and public rental housing units from the city of Helsinki. We estimate that the total subsidy to public housing tenants is considerable and comparable in size to the housing allowance, the main tenant-based housing program. We also find that the subsidy is less targeted towards low-income households than the housing allowance. Regarding neighborhood quality, we find that public housing tenants live in lower quality neighborhoods than similar households living in private rental housing. This result suggests that public housing is not better than the housing allowance in delivering better neighborhood quality to low-income households.

Keywords: H22, R21, R23, hedonic regression, housing policy, public housing

Suggested Citation

Eerola, Essi and Saarimaa, Tuukka, Who Benefits from Public Housing? (2015). Bank of Finland Research Discussion Paper No. 30/2015. Available at SSRN: https://ssrn.com/abstract=2705391

Essi Eerola (Contact Author)

Bank of Finland - Monetary Policy and Research Department ( email )

PO Box 160
00101 Helsinki
Finland

VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

Tuukka Saarimaa

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Aalto University - School of Engineering ( email )

PO BOX 14100
Aalto 00076
Finland

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