Public Housing and Labor Supply

Abstract

The federal government spent more than $19 billion on subsidized housing programs for the poor in Fiscal Year 1992. Of this amount, roughly two-thirds was spent on Section 8 housing vouchers and one-third on public housing projects. Although spending on these programs is nearly equal to Aid to Families with Dependent Children (AFDC), Supplemental Security Income, or Food Stamp expenditure, there is comparatively little empirical evidence on how housing programs affect economic behavior. The goal of this study is to answer two sets of questions: How do the income eligibility rules, marginal tax rates, and subsidies from the housing program affect the work behavior of recipients? We consider whether the fact that some housing benefits are lost in their entirety when income goes beyond the eligibility level (known as the public housing notch) distorts work behavior. How does public housing interact with other welfare programs such as AFDC, Medicaid, SSI, and Food Stamps? The STATA programs and data used in this study may be obtained from the authors; email requests to: yelowitz@ucla.edu.

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