Offsetting the Earnings Disincentive in Public Housing: Evidence from a Behaviorally Informed Field Intervention

Holly Dykstra () and Fernández Guerrico, Sofía ()
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Holly Dykstra: University of Konstanz
Fernández Guerrico, Sofía: University of Konstanz

No 18483, IZA Discussion Papers from IZA Network @ LISER

Abstract: Income-based rents in public housing create an earnings disincentive. We collaborate with a public housing authority to design a behaviorally informed program that returns part of the rent induced by higher earnings to residents. Importantly, the program automatically enrolled households and was explicitly designed to make the increased payoff to working salient. Using a difference-in-differences approach, we estimate that annual household-head earnings rise 17% ($1,370/year) and public assistance falls 7.5%, with impacts on both intensive and extensive margins. These results provide evidence that an in-work benefit designed for salience can offset the earnings disincentive and affect follow-through labor market behavior.

Keywords: labor supply; in-work benefits; salience; public housing (search for similar items in EconPapers)
JEL-codes: D91 I38 J22 R38 (search for similar items in EconPapers)
Date: 2026-03
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