Do Social Housing Programs Increase Poverty? An Empirical Analysis of Shelter Induced Poverty in Latin America

Abstract

In this paper we estimate the size of shelter induced poverty by housing tenure in Latin America and determine whether public housing programs of the ABC type (programs that require savings, provide vouchers and with the residual financed through a public or privately provided mortgage for a given valued program house) increase or decrease shelter induced poverty. Shelter induced poverty describes the situation where a household, after paying for housing (rent or mortgage plus utilities, property taxes and house maintenance), cannot afford the minimum poverty basket of non-housing goods. We find that shelter induced indigence and poverty is substantial. It varies across countries and more so according to the housing tenure. Housing programs, as currently designed, generally would further increase indigence and poverty rates. These findings suggest housing should be considered in poverty analysis and used as a mechanism in poverty reduction strategies. The findings also suggest that housing programs should use shelter induced poverty as a means to prioritise applicants for housing program but need to increase the size of the existing housing vouchers to avoid further increasing shelter induced poverty, particularly if targeted to the poor.

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