Working Paper: NBER ID: w1161
Authors: Harvey S. Rosen
Abstract: This paper surveys the effects of two of the most important federal policies toward housing: the "implicit subsidy" for owner-occupied housing in the income tax code, and the provision of housing for low income families at rents below cost. Emphasis is placed on the methodological problems that arise in attempts to assess the efficiency and distributive implications of these programs.Section 1 critically discusses the rationalization for a government housing policy. Section 2 investigates the econometric problems associated with estimating the effects of government policy upon housing decisions.The federal tax treatment of owner-occupation and how it affects the cost and demand for homeownership are discussed in Section 3. In Section 4, the positive and normative implications of U.S. policies for low income housing are evaluated.The conclusion notes that the policies under concern have led to a greater than efficient amount of housing consumption, and have on net probablyl ed to a more unequal distribution of income.
Keywords: housing subsidies; efficiency; equity; housing policy
JEL Codes: H2; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| implicit subsidy for owner-occupied housing in the income tax code (H20) | increased demand for homeownership (R21) |
| provision of low-income housing at below-market rents (R31) | implications for equity (D63) |
| federal housing subsidies (H53) | greater-than-efficient amount of housing consumption (R21) |
| federal housing subsidies (H53) | contributed to income inequality (D31) |