Do housing allowances increase rents? Evidence from a discrete policy change

Dean Hyslop and David Rea

Journal of Housing Economics, 2019, vol. 46, issue C

Abstract: This paper exploits a natural experiment created by a 2005 policy change to New Zealand's Accommodation Supplement (AS) to examine the extent to which an increase in housing subsidies increased rent. The policy change created a new AS-zone around central Auckland, with higher subsidy maxima for residents within the zone. Using administrative data on AS recipients on either side of the new zone boundary, we estimate that average support was $6.80 per week higher inside than outside the boundary in the second year after the policy change, and about one-third ($2.44) passed through to higher rent. The impacts were concentrated among families with children and, consistent with the policy changes, among higher quantiles of the rent distribution. The results imply the marginal propensity to spend on housing is about 0.35, and the elasticity of housing expenditure with respect to income is about 0.55.

Keywords: Accommodation Supplement; Housing subsidy; Rents (search for similar items in EconPapers)
JEL-codes: H22 H53 R21 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1051137718302602
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Do housing allowances increase rents? Evidence from a discrete policy change (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:46:y:2019:i:c:s1051137718302602

DOI: 10.1016/j.jhe.2019.101657

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().