Does Growing Up in Tax-Subsidized Housing Lead to Higher Earnings and Educational Attainment?

49 Pages Posted: 10 Dec 2019 Last revised: 13 Mar 2020

See all articles by Elena Derby

Elena Derby

Georgetown University; Joint Committee on Taxation

Date Written: March 11, 2020

Abstract

This paper investigates the effects of the Low Income Housing Tax Credit (LIHTC) on residents of buildings qualifying for the credit. Specifically, it analyzes whether individuals who grow up in LIHTC housing are more likely to enroll in post-secondary education programs and have higher earnings as adults. Using administrative tax records, I find that each additional year spent in LIHTC housing as a child is associated with an average 3.9 percent increase in the likelihood of attending a higher education program for four years or more, and a 5.2 percent increase in future earnings. Furthermore, I find that there are heterogeneous effects when comparing individuals who live in LIHTC housing located in neighborhoods with different characteristics, and among families that have varying income levels and varying levels of housing security prior to moving into a LIHTC building. Based on this analysis, I conclude that the reason I see a positive LIHTC effect is likely that the housing subsidy provides families with a more stable living situation and with more disposable income.

Keywords: Low Income Housing, Tax Policy, Poverty and Welfare

JEL Classification: H20, I31, H53

Suggested Citation

Derby, Elena, Does Growing Up in Tax-Subsidized Housing Lead to Higher Earnings and Educational Attainment? (March 11, 2020). Available at SSRN: https://ssrn.com/abstract=3491787 or http://dx.doi.org/10.2139/ssrn.3491787

Elena Derby (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Joint Committee on Taxation

Room 1625 Longworth House Office Building
Washington, DC 20515
United States

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