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Labor Market Impacts of Exposure to Affordable Housing Supply: Evidence from the Low-Income Housing Tax Credit Program

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  • Deepak Saraswat

    (University of Connecticut)

Abstract

Affordable housing programs as place-based programs in the United States have an impact on the neighborhoods, but little is known about the impact of affordable housing construction on individuals living in the neighborhoods hosting these projects. This paper investigates the effects of affordable housing construction under the Low-Income Housing Tax Credit (LIHTC) program on individuals’ labor market outcomes and welfare dependence. We exploit the timing of changes in the LIHTC program leading to spatial changes in the affordable housing supply to compare labor market outcomes of individuals exposed to varying levels of housing construction. We overcome the empirical challenges posed by the selective sorting of individuals into neighborhoods by matching the timing of the change in housing supply to an individuals’ neighborhood of residence. We find an average improvement in the labor market outcomes of individuals as a result of higher exposure to the supply of affordable housing in their neighborhood. In addition, we document significant heterogeneities by race and ethnicity and find evidence that these heterogeneities are likely explained by the program-induced and migration-induced changes in neighborhood quality.

Suggested Citation

  • 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.
    • Handle: RePEc:uct:uconnp:2022-09
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    More about this item

    Keywords

    Low-income housing; Gentrification; Tax credits; Labor supply; Neighborhood changes;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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