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Housing Allowance and the Rent of Low-income Households

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  • Kangasharju, Aki

Abstract

This paper analyses the effect of a housing allowance programme on the rent paid by assisted low-income households. The data consist of some 12,000 rental households in the free market and municipal sectors during 1994–2003. The effect of the scheme is estimated using the programme reform of 2002 as an instrument. The reform increased the allowance of the already assisted households to various degrees depending on the location, size and age of housing, but had little effect on the eligibility for allowance. Results suggest that in the private sector an additional one euro of allowance increases the rent of claimants by 60–70 cents. The effect is zero in the municipal sector, due to the way rents are set. JEL: H24, R21

Suggested Citation

  • Kangasharju, Aki, 2008. "Housing Allowance and the Rent of Low-income Households," Discussion Papers 458, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:458
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    Cited by:

    1. Figari, Francesco & Hollan, Katarina & Matsaganis, Manos & Zolyomi, Eszter, 2019. "Recent changes in housing policies and their distributional impact across Europe," EUROMOD Working Papers EM12/19, EUROMOD at the Institute for Social and Economic Research.
    2. Sayag, Doron & Zussman, Noam, 2020. "Who benefits from rental assistance? Evidence from a natural experiment," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    3. Gibbons, Stephen & Sanchez-Vidal, Maria & Silva, Olmo, 2020. "The bedroom tax," Regional Science and Urban Economics, Elsevier, vol. 82(C).
    4. Céline Grislain-Letremy & Corentin Trévien, 2014. "The Impact of Housing Subsidies on the Rental Sector : The french Example," Working Papers 2014-24, Center for Research in Economics and Statistics.
    5. Braakmann, Nils & McDonald, Stephen, 2020. "Housing subsidies and property prices: Evidence from England," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    6. Van Ommeren, Jos & Koopman, Marnix, 2011. "Public housing and the value of apartment quality to households," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 207-213, May.
    7. 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.
    8. 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.
    9. repec:zbw:bofrdp:2011_011 is not listed on IDEAS
    10. Virén, Matti, 2011. "Does housing allowance feed through into rental prices?," Research Discussion Papers 11/2011, Bank of Finland.
    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. Virén, Matti, 2011. "Does housing allowance feed through into rental prices?," Bank of Finland Research Discussion Papers 11/2011, Bank of Finland.
    13. Doron Sayag & Noam Zussman, 2015. "The Distribution of Rental Assistance Between Tenants and Landlords:The Case of Students in Central Jerusalem," Bank of Israel Working Papers 2015.01, Bank of Israel.
    14. 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.
    15. Chen, Mengkai & Liu, Tong & Wang, Xianzhu, 2024. "The effect of the housing provident fund on housing affordability in Urban China: A quantitative analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 1-11.
    16. Céline Grislain-Letrémy & Corentin Trevien, 2022. "The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example," Working papers 886, Banque de France.
    17. 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.
    18. Christophe André & Thomas Chalaux, 2018. "Building a typology of housing systems to inform policies in OECD and EU member States," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 500-501-5, pages 13-36.
    19. Matti Viren, 2013. "Is the housing allowance shifted to rental prices?," Empirical Economics, Springer, vol. 44(3), pages 1497-1518, June.

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    More about this item

    Keywords

    Housing allowance; Rental housing; Price of housing; Social security; Sosiaaliturva; Effectiveness of public services; Julkisten palvelujen vaikuttavuus;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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