Incidence and Price Discrimination: Evidence from Housing Vouchers

W13-7: What is the incidence of housing vouchers? In a frictionless, price-taking equilibrium, increased generosity of a narrowly-targeted subsidy causes increases in unit quality. However, search frictions may limit quality improvements and subsidies may accrue to landlords through price discrimination.

Analyzing a 2005 formula change for Housing Choice Vouchers, we estimate that a $1 increase in the county-wide price ceiling raised same-address voucher rents by 13-20 cents. For tenants who moved, quality improvements were minimal. Second, we find that a Dallas pilot which replaced a metro-wide price ceiling with ZIP-code-specific ceilings improved tenants’ chosen neighborhood quality by 0.2 standard deviations.

This publication was originally published 10/25/2013. 
It was revised on 04/19/2016.