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Housing Choice as a Function of Risks Confronting Low-income Households

Anand Sahasranaman, Vishnu Prasad and Aditi Balachander

Journal of Emerging Market Finance, 2020, vol. 19, issue 1, 100-118

Abstract: The design of housing solutions for low-income populations has been one of the most pressing policy concerns in developing countries like India. In this work, we explore the effect of risks confronting low-income households—unemployment, health and mortality—on their choice of housing arrangements. We use simulations to study the evolution of long-term wealth of a stylised low-income household faced with these risks and find that, on average, rental housing significantly reduces the risk of undesirable wealth fluctuations over time. From a policy perspective, this means greater focus and incentives for the development of low-income rental markets using strategies such as provision of rental vouchers, rent-to-own models or long-term leases, in addition to the traditional ownership-based housing strategies. The development of housing solutions encompassing a range of rental and ownership models will be critical to ensuring the availability of safe and affordable housing for all urban residents. JEL Codes: C63, O18

Keywords: Emerging markets; financial inclusion; government policy and regulation; housing; simulation (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1177/0972652719877475

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