Abstract
Housing allowances should enable economically weak households to accommodate in good quality housing. Utilizing a special feature of the Norwegian housing allowance system, we study how housing allowances affect the incidence of crowded living and mobility. We investigate housing market behavior in a treatment group in a situation in which variations in housing situation feeds directly into variations in the amount of housing allowances received. This is compared to the behavior of a control group in a situation where variations in the housing market behavior do not feed into variations of the amount of housing allowances received. Our empirical analyses reveal that the probability of moving out of crowded housing conditions is 14 % higher among housing allowance receivers whose amount of housing allowances is affected by marginal variations in the pre-allowance housing expenses, than in the control group. The findings of this paper could have implications for the way housing allowance systems is designed and revised.
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Notes
For public tenants the housing allowances cover 80 % of an increase of the rent up to the ceiling. In this paper we do not distinguish between marginal prices of 0.2 and 0.3.
Obviously, households who passes through the ceiling from above or below as a result of a move will have an average marginal price somewhere between 0.3 (or 0.2) and one. We base our empirical analyses on the marginal price around the initial housing expenses rather than on this average marginal price.
By the end of 2014 the value of 1 Euro was approximately 9.00 NOK.
Admittedly some local housing markets cross municipal borders. By omitting all moves between municipals we get rid of all long-distance moves, but we miss some observations of within local-housing-market moves.
Using this specification one avoids the problems of interpreting interaction terms in a non-linear model, Norton et al. (2004).
Note that while the marginal effect of facing a high marginal price in a model which did not take account of the correlation of the mechanism that generates crowded living subsequent to a move and the selection into crowdedness prior to a move is as high as 14.1 % points, while the estimate from our selection model is ‘only’ 6.6 % points.
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Nordvik, V. Housing allowances, mobility and crowded living: the Norwegian case. J Hous and the Built Environ 30, 667–681 (2015). https://doi.org/10.1007/s10901-015-9439-4
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DOI: https://doi.org/10.1007/s10901-015-9439-4