Modest Work Increase with Housing Vouchers, Contrary to Theory

Title:
Modest Work Increase with Housing Vouchers, Contrary to Theory
Author:
Deven Carlson, Robert Haveman, Tom Kaplan, Barbara Wolfe
Source:
Publication Date:
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Contrary to economic theory which suggests that any form of income support will reduce work effort, a 2009 study performed by researchers at the University of Wisconsin at Madison found that over time, low-income households with housing choice vouchers have modestly increased work efforts. Housing choice vouchers are subsidies given to qualifying low-income families for private, market-rate housing. The study compared households that had used vouchers to similar low-income households that had not used vouchers. While lower earnings were associated with the vouchers in the short term, over the long term this effect disappeared and was reversed in many cases. Among those who used housing vouchers, the most vulnerable populations actually fared the best. Minorities, young adults, and people without a high school education who used vouchers all experienced an increase in earnings or work effort.

Major findings:

  • After 5 years, earnings were similar among those that used vouchers and other low-income households, despite economic theory that households would substitute vouchers for earned income.
  • After 5 years, low-income households that had used vouchers showed an increased¬†work effort, measured by working 2.4% more quarters than similar households that had not used vouchers.
  • African-American households that used vouchers experienced an $800 increase in their annual earnings, leading them to earn $450 more a year than their counterparts that did not use vouchers.
  • After 5 years, young adults and people without a high school degree who used vouchers experienced an increase in work effort.