The Effect of Housing Assistance Program on Labor Supply and Family Formation

This paper studies the effect of the U.S. Housing Choice Voucher Program Section 8 on low-income people’s labor supply and family formation. I analyze this effect using data from the 2014 Panel and 2018 Panel of the restricted-use Survey of Income and Program Participation (SIPP). My economic approach is to explore the policy which assigns housing vouchers based on an income cutoff as an instrument to study the effect of housing vouchers on low-income people’s employment and family formation. The assignment policy states that households with income lower than 50% of the median income for the MSA area are eligible for housing vouchers. With household eligibility status, I compare the households whose income is slightly below the income cutoff (eligible households) with the households whose income is slightly above the income cutoff (ineligible household) to identify the effect of housing vouchers on employment and family formation. I find that housing vouchers have a negative impact on individual labor supply through both extensive and intensive margins. In addition, housing vouchers have a negative impact on family formation by decreasing marriage and increasing divorce rates. This project will contribute to our understanding of the effect of Section 8 Housing Vouchers on low-income households’ labor supply and family formation.