Estimating the Benefits of the Korean Public Housing Program for Low-Income Families Under Non-Homothetic Preference.
KDI Journal of Economic Policy 2007, 29(2) 159-175
18 Pages Posted: 22 Apr 2016 Last revised: 22 May 2016
Date Written: December 30, 2007
It is widely accepted that public rental housing programs affect both the allocation of resources and the distribution of welfare. This paper explains institutional arrangements of public housing program in Korea and assesses the benefits of the program. In contrast to the previous studies which employed homothetic preferences, the benefits of the public housing were estimated based on non-homothetic preferences to allow for different income effects across households.
Empirical results suggest that average benefit-cost ratio of public housing program is 0.91, and hence, the deadweight loss seems to be well-contained in Korean public housing program compared to other countries. However, the distribution of the benefits reveals that the transmission of the benefits should be improved to achieve the desired goals of residential welfare for low income families.
Keywords: Non-homothetic Preference, Public Housing, Benefit-Cost Ratio
JEL Classification: D01, D31, D61, D63
Suggested Citation: Suggested Citation