Low-Income Housing Assistance: Its Impact on Labor Force and Housing Program Participation

Many studies in the 1970s and 1980s have examined the effects of the welfare system on individual behavior. All of these studies fail to appropriately consider low income housing assistance. Most studies have either ignored housing assistance or have implicitly assumed that there is no rationing in this program. This paper presents a simple model that measures the impact of rationing one public assistance program in the context of the entire benefit package offered to female-headed households. The results suggest that the neglect of controls for the rationing in the housing programs accounts for a large part of the insensitivity of housing assistance found in past research. Also, simulations suggest that the housing programs raise the disincentives of the welfare package an additional twenty-one percent when compared to the entitlement portion of the package alone. JEL Classification: H0