The socio-economic consequences of housing assistance

This paper analyzes the effect of Europe’s largest public housing program on socio-economic outcomes for low-income households. Using lotteries for housing units in the Netherlands and data linking national registers to application choices, I show that the average move into public housing negatively affects labor market outcomes and proxies for neighborhood quality, and increases public assistance receipt. However, consistent with a model of labor supply responses to conditional in-kind transfers, average impacts miss substantial heterogeneity both across neighborhoods and, within neighborhood, across recipients. Moves into high-income neighborhoods generate positive effects, which are driven by ‘upward’ moves made by individuals previously living in lowor middle-income neighborhoods. Lateral and ‘downward’ moves have the opposite effect. To evaluate whether these results generalize to non-recipients, I develop a model of application behavior that utilizes panel data on application choices and exploits variation induced by the housing allocation mechanism. Using the model, I recover the distribution of heterogeneity that drives selection into and returns from lotteries, and estimate that selection on gains is limited. This suggests that targeting public housing in high-income neighborhoods based on observable characteristics can increase economic self-sufficiency. ∗Kenneth C. Griffin Department of Economics, University of Chicago, 1126 East 59th Street Chicago, IL 60637 (e-mail: wlvandijk@uchicago.edu). I gratefully acknowledge financial support from the University of Chicago Social Sciences Division, the University of Chicago Kenneth C. Griffin Department of Economics, and the Becker Friedman Institute. I would like to thank Ali Hortaçsu, Magne Mogstad, and Azeem Shaikh for serving on my thesis committee and providing valuable guidance and feedback. I am grateful for discussions with many people, including Eliot Abrams, Mohammad Akbarpour, Dan Black, Stephane Bonhomme, Eric Budish, Caterina Calsamiglia, Jose Ignacio Cuesta, Angela Denis Pagliero, Manasi Deshpande, Michael Dinerstein, Deniz Dutz, Pieter Gautier, Michael Greenstone, James Heckman, Cody Hochstenbach, John Eric Humphries, Sonia Jaffe, Juanna Joensen, Paymon Khorrami, Scott Kominers, Steven Kromhout, Thibaut Lamadon, Thomas Lemieux, Jacob Leshno, Steve Levitt, Claudia Macaluso, Yusuke Narita, Derek Neal, Edgar Olsen, Hessel Oosterbeek, Hyunmin Park, Canice Prendergast, Bastian Ravesteijn, Ana Reynoso, Jesse Shapiro, Rob Shimer, Beth Shinn, Mark Shroder, Daniel Tannenbaum, Pietro Tebaldi, Alex Teytelboym, Neil Thakral, Bas van der Klaauw, Alessandra Voena, Chris Walters, Anthony Lee Zhang, and participants of the Applied Micro working group, IO working group, and Econometics working group at the University of Chicago. Ella Deeken provided excellent research assistance. I wish to thank Martin Broxterman, Ivo Gorissen, Petra Slingerland-Roos, Cees Steijn, and Michael Vermaesen at Statistics Netherlands for their advice and technical support; Jeroen van der Veer at Amsterdamse Federatie van Woningcorporaties and Alexandra de Jong at WoningNet for their help in collecting data; Vera Berkers, Guus Crommelin, Kees Dignum, Loes Olgers, and Sanne van der Lelij at the Housing Department of the Amsterdam municipality for helpful feedback; and Ruben Henderiks, Jolanda Hoogeboom, Thamar Hoekema, Pieter Schippers, Roelf-Jan van Til, and Jacobien Vogelzang for discussions on housing allocation. Any errors are my own.