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Social Housing Policy in a Segmented Housing Market: Indirect Effects on Markets and on Individuals

Trond Arne Borgersen ()
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Trond Arne Borgersen: Østfold University College

International Journal of Economic Sciences, 2019, vol. 8, issue 2, 1-21

Abstract: This paper analyses indirect effects of social housing policy (SHP) in a segmented housing market. A two segment-housing ladder, where equity determines up trading, shows how SHP-measures targeting either housing supply or housing demand impact market developments and individual housing careers. When addressing market developments the paper considers house prices and housing supply. Analysing housing careers we highlights the ability of households indirectly exposed to SHP to trade up a housing ladder. The segmented housing market model contains both multipliers, along the lines of the Balanced Budget Multiplier of Haavelmo (1945), and non-neutral price effects across segments. These features allow some novel results when discussing indirect effects of SHP. Relating SHP to up-trading and a housing ladder where households simultaneously act as buyers and sellers, we first of all show the effect of SHP on the supply of used homes, an important part of housing supply. Second, this framework makes us able to position crowding-out across market segments. Both features are novel in the SHP-discussion. The paper also shows how SHP might create negative indirect effects on the up-trading ability of households that do not benefit from SHP measures.

Keywords: Housing market structure; social housing policy; indirect effects (search for similar items in EconPapers)
JEL-codes: I38 R21 R31 (search for similar items in EconPapers)
Date: 2019
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