IDEAS home Printed from https://ideas.repec.org/p/bfr/banfra/886.html
   My bibliography  Save this paper

The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example

Author

Listed:
  • C line Grislain-Letr my
  • Corentin Trevien

Abstract

In many countries, housing subsidies to tenants are one of the main tools for housing policy but have an inflationary impact in the short term. For the first time, by taking the French example, we assess the long-term impact of housing subsidies on price, quantity, and quality in the private rental sector. We show that housing subsidies have a long-term overall upward impact on rents, even for tenants who do not benefit from subsidies. This inflationary impact is accompanied by an increase in quantity; no impact on quality is detected. These effects are heterogeneous. For small dwellings, a few years after the extension of housing subsidies, rents stopped increasing significantly and the quantity of one-room dwellings, including new buildings, increased.

Suggested Citation

  • C line Grislain-Letr my & Corentin Trevien, 2022. "The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example," Working papers 886, Banque de France.
    • Handle: RePEc:bfr:banfra:886
    as

    Download full text from publisher

    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/wp886.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Horn, Keren Mertens & Ellen, Ingrid Gould & Schwartz, Amy Ellen, 2014. "Do Housing Choice Voucher holders live near good schools?," Journal of Housing Economics, Elsevier, vol. 23(C), pages 28-40.
    2. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    3. Antoine Bozio & Malka Guillot & Marion Monnet & Lucile Romanello, 2017. "Designing Housing Benefits: An Application with French Data," Economie & Prévision, La Documentation Française, vol. 0(2), pages 163-175.
    4. Eriksen, Michael D. & Rosenthal, Stuart S., 2010. "Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 953-966, December.
    5. Guillaume Chapelle & Benjamin Vignolles & Clara Wolf, 2018. "Impact of a Housing Tax Credit on Local Housing Markets: Evidence from France," Annals of Economics and Statistics, GENES, issue 130, pages 101-131.
    6. Gyourko, Joseph & Molloy, Raven, 2015. "Regulation and Housing Supply," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1289-1337, Elsevier.
    7. Aki Kangasharju, 2010. "Housing Allowance and the Rent of Low‐income Households," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(3), pages 595-617, September.
    8. Braakmann, Nils & McDonald, Stephen, 2020. "Housing subsidies and property prices: Evidence from England," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    9. Anne Laferrère & David le Blanc, 2004. "Gone with the Windfall: How Do Housing Allowances Affect Student Co-residence?," CESifo Economic Studies, CESifo Group, vol. 50(3), pages 451-477.
    10. Sayag, Doron & Zussman, Noam, 2020. "Who benefits from rental assistance? Evidence from a natural experiment," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    11. Anne Laferrère & David le Blanc, 2002. "Comment les aides au logement affectent-elles les loyers ?," Économie et Statistique, Programme National Persée, vol. 351(1), pages 3-30.
    12. Robert Collinson & Peter Ganong, 2018. "How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 62-89, May.
    13. Matti Viren, 2013. "Is the housing allowance shifted to rental prices?," Empirical Economics, Springer, vol. 44(3), pages 1497-1518, June.
    14. Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, vol. 83(1), pages 109-152, January.
    15. Antoine Bozio & Gabrielle Fack & Julien Grenet, 2015. "Les allocations logement, comment les réformer ?," Post-Print halshs-01245524, HAL.
    16. Molloy, Raven, 2020. "The effect of housing supply regulation on housing affordability: A review," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    17. Eriksen, Michael D. & Lang, Bree J., 2020. "Overview and proposed reforms of the low-income housing tax credit program," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    18. Charles Ka Yui Leung & Joe Cho Yiu Ng & Edward Chi Ho Tang, 2020. "What do we know about housing supply? The case of Hong Kong SAR," Economic and Political Studies, Taylor & Francis Journals, vol. 8(1), pages 6-20, January.
    19. McMillen, Daniel & Singh, Ruchi, 2020. "Fair market rent and the distribution of rents in Los Angeles," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    20. Horn, Keren Mertens & Ellen, Ingrid Gould & Schwartz, Amy Ellen, 2014. "Reprint of “Do Housing Choice Voucher Holders Live Near Good Schools?”," Journal of Housing Economics, Elsevier, vol. 24(C), pages 109-121.
    21. Carlson, Deven & Haveman, Robert & Kaplan, Thomas & Wolfe, Barbara, 2012. "Long-term effects of public low-income housing vouchers on neighborhood quality and household composition," Journal of Housing Economics, Elsevier, vol. 21(2), pages 101-120.
    22. Ellen, Ingrid Gould, 2020. "What do we know about housing choice vouchers?," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    23. Michael D. Eriksen & Amanda Ross, 2015. "Housing Vouchers and the Price of Rental Housing," American Economic Journal: Economic Policy, American Economic Association, vol. 7(3), pages 154-176, August.
    24. Sinai, Todd & Waldfogel, Joel, 2005. "Do low-income housing subsidies increase the occupied housing stock?," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2137-2164, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian A. L. Hilber & Olivier Schoni, 2022. "Housing policy and affordable housing," CEP Occasional Papers 56, Centre for Economic Performance, LSE.
    2. Corentin Trevien, 2016. "Four essays in empirical urban economics : evaluation of French regional policies [Quatre essais en économie urbaine empirique : évaluation de politiques d'aménagement du territoire]," SciencePo Working papers Main tel-03498772, HAL.
    3. Kole, Kyle, 2022. "Housing vouchers reduce residential crowding," Journal of Housing Economics, Elsevier, vol. 55(C).
    4. Corentin Trevien, 2016. "Four essays in empirical urban economics : evaluation of French regional policies [Quatre essais en économie urbaine empirique : évaluation de politiques d'aménagement du territoire]," SciencePo Working papers tel-03498772, HAL.
    5. Essi Eerola & Teemu Lyytikäinen, 2021. "Housing Allowance and Rents: Evidence from a Stepwise Subsidy Scheme," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 84-109, January.
    6. Eerola, Essi & Lyytikäinen, Teemu & Saarimaa, Tuukka & Vanhapelto, Tuuli, 2022. "The Incidence of Housing Allowances: Quasi-Experimental Evidence," Working Papers 149, VATT Institute for Economic Research.
    7. 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.
    8. C. Grislain-Letrémy & C. Trevien, 2014. "The Impact of Housing Subsidies on the Rental Sector: the French Example," Documents de Travail de l'Insee - INSEE Working Papers g2014-08, Institut National de la Statistique et des Etudes Economiques.
    9. Eerola, Essi & Saarimaa, Tuukka, 2015. "Who benefits from public housing?," Bank of Finland Research Discussion Papers 30/2015, Bank of Finland.
    10. Blanco, Hector, 2023. "Pecuniary effects of public housing demolitions: Evidence from Chicago," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    11. Hyslop, Dean R. & Rea, David, 2019. "Do housing allowances increase rents? Evidence from a discrete policy change," Journal of Housing Economics, Elsevier, vol. 46(C).
    12. Essi Eerola & Teemu Lyytikäinen & Tuukka Saarimaa & Tuuli Vanhapelto, 2024. "The Incidence of Rent Subsidies: Evidence on Rents, Housing Choices and Supply," CESifo Working Paper Series 11478, CESifo.
    13. Ning Zhang, 2022. "In-kind housing transfers and labor supply: a structural approach," Economics Series Working Papers 992, University of Oxford, Department of Economics.
    14. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 887-986, Elsevier.
    15. Michael C Lens, 2018. "Extremely low-income households, housing affordability and the Great Recession," Urban Studies, Urban Studies Journal Limited, vol. 55(8), pages 1615-1635, June.
    16. Rotberg, Shahar & Steinberg, Joseph B., 2024. "Mortgage interest deductions? Not a bad idea after all," Journal of Monetary Economics, Elsevier, vol. 144(C).
    17. Goeyvaerts, Geert, 2023. "Reconstructing cities: Stimulating redevelopment through the tax code," Regional Science and Urban Economics, Elsevier, vol. 99(C).
    18. Aliprantis, Dionissi & Martin, Hal & Phillips, David, 2022. "Landlords and access to opportunity," Journal of Urban Economics, Elsevier, vol. 129(C).
    19. Mense, Andreas, 2020. "The Impact of New Housing Supply on the Distribution of Rents," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224569, Verein für Socialpolitik / German Economic Association.
    20. Raya, Josep Maria & Torres-Pruñonosa, Jose, 2022. "The importance of administrative data in the evaluation of the incidence of social housing allowance programmes," Evaluation and Program Planning, Elsevier, vol. 94(C).

    More about this item

    Keywords

    Public Policy Evaluation; Social Benefits; Housing Subsidies; Tax Incidence;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bfr:banfra:886. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael brassart (email available below). General contact details of provider: https://edirc.repec.org/data/bdfgvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.