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Poverty concentration and the Low Income Housing Tax Credit: Effects of siting and tenant composition

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  • Ellen, Ingrid G.
  • Horn, Keren M.
  • O'Regan, Katherine M.

Abstract

New evidence on the effects of growing up in neighborhoods of concentrated poverty has heightened policy interest in understanding the role housing programs may play in shaping the distribution of poverty. In particular, as the nation's largest source of funding for the construction of affordable rental housing, the Low Income Housing Tax Credit (LIHTC) could play a critical role in shaping the distribution of poverty. This paper examines whether the LIHTC affects the concentration of poverty by examining who lives in tax credit developments in different neighborhoods, and how neighborhoods and metropolitan areas change after LIHTC developments are built. Through assessing both the effects of siting and tenant composition, we find little evidence that the LIHTC is increasing the concentration of poverty – and we find some evidence that it is reducing poverty rates in high-poverty neighborhoods. We also make suggestions for states who want to use LIHTC to do more to deconcentrate poverty.

Suggested Citation

  • Ellen, Ingrid G. & Horn, Keren M. & O'Regan, Katherine M., 2016. "Poverty concentration and the Low Income Housing Tax Credit: Effects of siting and tenant composition," Journal of Housing Economics, Elsevier, vol. 34(C), pages 49-59.
    • Handle: RePEc:eee:jhouse:v:34:y:2016:i:c:p:49-59
    DOI: 10.1016/j.jhe.2016.08.001
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    References listed on IDEAS

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    1. Rebecca Diamond & Tim McQuade, 2019. "Who Wants Affordable Housing in Their Backyard? An Equilibrium Analysis of Low-Income Property Development," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1063-1117.
    2. Lang, Bree J., 2012. "Location incentives in the low-income housing tax credit: Are qualified census tracts necessary?," Journal of Housing Economics, Elsevier, vol. 21(2), pages 142-150.
    3. Matthew Freedman & Tamara McGavock, 2015. "Low‐Income Housing Development, Poverty Concentration, and Neighborhood Inequality," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 34(4), pages 805-834, September.
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    5. Baum-Snow, Nathaniel & Marion, Justin, 2009. "The effects of low income housing tax credit developments on neighborhoods," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 654-666, June.
    6. Raj Chetty & Nathaniel Hendren & Lawrence F. Katz, 2016. "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment," American Economic Review, American Economic Association, vol. 106(4), pages 855-902, April.
    7. Schwartz, Amy Ellen & Ellen, Ingrid Gould & Voicu, Ioan & Schill, Michael H., 2006. "The external effects of place-based subsidized housing," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 679-707, November.
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    Cited by:

    1. Deepak Saraswat, 2022. "Labor Market Impacts of Exposure to Affordable Housing Supply: Evidence from the Low-Income Housing Tax Credit Program," Working papers 2022-09, University of Connecticut, Department of Economics.
    2. Kevin Corinth & Grace Finley, 2020. "The geography of unsheltered homelessness in the city: Evidence from “311” calls in New York," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 628-652, September.
    3. Cody Cook & Pearl Z. Li & Ariel J. Binder, 2023. "Where to Build Affordable Housing? Evaluating the Tradeoffs of Location," Working Papers 23-62, Center for Economic Studies, U.S. Census Bureau.
    4. Ports, Katie A. & Rostad, Whitney L. & Luo, Feijun & Putnam, Michelle & Zurick, Elizabeth, 2018. "The impact of the low-income housing tax credit on children's health and wellbeing in Georgia," Children and Youth Services Review, Elsevier, vol. 93(C), pages 390-396.
    5. Eerola, Essi & Saarimaa, Tuukka, 2018. "Delivering affordable housing and neighborhood quality: A comparison of place- and tenant-based programs," Journal of Housing Economics, Elsevier, vol. 42(C), pages 44-54.
    6. Saiz, Albert, 2023. "The Global Housing Affordability Crisis: Policy Options and Strategies," IZA Policy Papers 203, Institute of Labor Economics (IZA).
    7. Kevin C. Corinth & Grace Finley, 2017. "When the rich meet the poor: Interactions with the homeless in New York City," AEI Economics Working Papers 926367, American Enterprise Institute.
    8. Lei Zhou & Feng Zhen & Yiqing Wang & Liyang Xiong, 2019. "Modeling the Spatial Formation Mechanism of Poverty-Stricken Counties in China by Using Geographical Detector," Sustainability, MDPI, vol. 11(17), pages 1-20, August.

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    More about this item

    Keywords

    Poverty concentration; Housing policy; Low income housing tax credit;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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