Housing Policy and Redistribution

Sanna Tenhunen and Matti Tuomala

No 754, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: The potential redistributive role of the housing subsidies has got a relatively little attention in the literature. However, non-linear housing subsidy schemes are commonly used by many countries. We consider the question of the optimal tax treatment of housing in a model where agents di¤er in two dimensions; ability and the housing price they face. The problem is also solved numerically. In addition to a general four-type model, we also considered two extensions: endogenously determined housing prices and paternalistic government. The key lesson from the paper is that when individuals differ also in access to housing, the housing subsidy schemes have a redistributive role and they are non-linear. A justification for subsidizing or taxing housing holds also without introducing any merit good argument to the analysis; in the optimal tax model where agents di¤er in their abilities and access to housing it is optimal to tax and subsidize housing, even with separable preferences.

Keywords: Housing subsidies; two-dimensional heterogeneity; optimal taxation (search for similar items in EconPapers)
JEL-codes: D62 H23 H24 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-04
References: Add references at CitEc
Citations:

Downloads: (external link)
http://urn.fi/urn:isbn:978-951-44-6940-4 First version, 2007 (application/pdf)

Related works:
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:tam:wpaper:0754

Access Statistics for this paper

More papers in Working Papers from Tampere University, Faculty of Management and Business, Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sami Remes (sami.remes@tuni.fi).