Housing Subsidies: Effects on Housing Decisions, Efficiency, and Equity

83 Pages Posted: 26 May 2004 Last revised: 9 May 2015

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 1983

Abstract

This paper surveys the effects of two of the most important federal policies toward housing: the "implicit subsidy" for owner-occupied housing in the income tax code, and the provision of housing for low income families at rents below cost. Emphasis is placed on the methodological problems that arise in attempts to assess the efficiency and distributive implications of these programs.Section 1 critically discusses the rationalization for a government housing policy. Section 2 investigates the econometric problems associated with estimating the effects of government policy upon housing decisions.The federal tax treatment of owner-occupation and how it affects the cost and demand for homeownership are discussed in Section 3. In Section 4, the positive and normative implications of U.S. policies for low income housing are evaluated.The conclusion notes that the policies under concern have led to a greater than efficient amount of housing consumption, and have on net probablyl ed to a more unequal distribution of income.

Suggested Citation

Rosen, Harvey S., Housing Subsidies: Effects on Housing Decisions, Efficiency, and Equity (June 1983). NBER Working Paper No. w1161. Available at SSRN: https://ssrn.com/abstract=305544

Harvey S. Rosen (Contact Author)

Princeton University - Department of Economics ( email )

001 Fisher Hall
Princeton, NJ 08544
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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