In-Kind Housing Transfers and Labor Supply: A Structural Approach

Abstract

Policymakers continuously debate the current U.S. Housing Voucher Program, which features a high degree of rationing and decreasing subsidy amount as income increases. This paper studies the effect of the Housing Voucher Program on low-income household labor supply and welfare. Using several datasets, I estimate a dynamic lifecycle model to study the long-term impacts of housing vouchers on employment, and examine how a set of policy reforms affect household labor supply and well-being. I show that voucher usage (as opposed to no vouchers) decreases female labor supply by 17% and male labor supply by 7% in the long run. Compared to the current program, a proposed reform that provides every recipient with a flat-rate subsidy increases female labor supply by 4% and leads to higher welfare. Policies that offer a lower subsidy to a larger population decrease labor supply by 3-4% and increase household welfare. Time-limited subsidies increase female employment by 4% and improve overall welfare.