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When should homeless families get subsidized apartments? A theoretical inquiry

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  • O'Flaherty, Brendan

Abstract

How and when should operators of homeless shelters place families from these shelters into subsidized housing? I apply the tools of contract theory to this problem, especially some approaches that have been taken to optimal unemployment insurance. The problem combines moral hazard and adverse selection. When all families are drawn from the same distribution, placement should occur immediately. When families are heterogeneous, the optimal strategy creates a separating equilibrium. Good searchers self-select into a contract with high probability of immediate placement and no probability of later placement; poorer searchers self-select into a contract with a lower probability of immediate placement but a positive probability of later placement.

Suggested Citation

  • O'Flaherty, Brendan, 2009. "When should homeless families get subsidized apartments? A theoretical inquiry," Journal of Housing Economics, Elsevier, vol. 18(2), pages 69-80, June.
  • Handle: RePEc:eee:jhouse:v:18:y:2009:i:2:p:69-80
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    References listed on IDEAS

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    1. Hagedorn, Marcus & Kaul, Ashok & Mennel, Tim, 2010. "An adverse selection model of optimal unemployment insurance," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 490-502, March.
    2. Dennis P. Culhane & Stephen Metraux & Jung Min Park & Maryanne Schretzman & Jesse Valente, 2007. "Testing a typology of family homelessness based on patterns of public shelter utilization in four U.S. jurisdictions: Implications for policy and program planning," Housing Policy Debate, Taylor & Francis Journals, vol. 18(1), pages 1-28, January.
    3. Shavell, Steven & Weiss, Laurence, 1979. "The Optimal Payment of Unemployment Insurance Benefits over Time," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1347-1362, December.
    4. O'Flaherty, Brendan & Wu, Ting, 2006. "Fewer subsidized exits and a recession: How New York City's family homeless shelter population became immense," Journal of Housing Economics, Elsevier, vol. 15(2), pages 99-125, June.
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    Cited by:

    1. O'Flaherty, Brendan & Scutella, Rosanna & Tseng, Yi-Ping, 2018. "Private information, exits from homelessness, and better ways to operate rehousing programs," Journal of Housing Economics, Elsevier, vol. 41(C), pages 93-105.
    2. O'Flaherty, Brendan, 2019. "Homelessness research: A guide for economists (and friends)," Journal of Housing Economics, Elsevier, vol. 44(C), pages 1-25.

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