The Effects of Public LowIncome Housing Vouchers on Social and Labor Market Outcomes

1
The Effects of Public Low-Income Housing Vouchers
on Social and Labor Market Outcomes

• Deven Carlson
• Robert Haveman
• Tom Kaplan
• Barbara Wolfe
• Institute for Research on Poverty
• University of Wisconsin-Madison
• November 21, 2008

2
Presentation Overview

• Prior Research Results
• Research question and motivation
• What effect does the receipt of a low-income
  housing voucher have on social and labor market
  outcomes?
• Theoretical link between voucher receipt and
  outcomes
• Data sources and methodology
• Major conclusions
• Positive effect on neighborhood quality in the
  long term
• Short-term changes in household composition, but
  greater subsequent stability
• Greater use of TANF and state-subsidized child
  care
• Short-term negative effect on earnings diminishes
  over time
• Mixed effects on work effort
• Results vary by demographic subgroup

3
Previous Studies

• Experimental
• Mixed Results
• Gautreaux Program- Chicago
• Moving to Opportunity- 5 Cities
• Welfare to Work- 6 Cities
• Chicago Housing Authority Natural Experiment
• Minnesota Family Investment Plan
• Nonexperimental
• Also mixed results
• Bania, Coulton, and Leete (2003)
• Harkness and Newman (2003 2006)

4
Our Research Approach

• Effect of a housing voucher on social and labor
  market outcomes for low-income families in
  Wisconsin
• Includes both urban and rural areas
• Large sample sizes allow us to examine several
  demographic subgroups
• Pool multiple years and follow recipients over a
  longer time period

5
What is the Section 8 Program? How does it work?

• Primary objective of program is to enable very
  low-income families to choose and lease safe,
  decent, and affordable privately-owned rental
  housing.
• Section 8 vouchers currently serve about 1.9
  million families nationally (more than 850,000
  families with minor children).
• Recipients must have income below 50 percent of
  area median income.
• If awarded a voucher, recipients choose available
  private rental housing and, if they find it,
  contribute 30 percent of their income toward
  rent.
• The program then pays the difference between the
  contribution and actual rent (up to a locally
  defined fair market rent).

6
Outcomes of Interest

• Social Outcomes
• Neighborhood quality
• Four measures
• Household composition changes
• Six measures of household composition changes
• Public program participation
• State-subsidized child care- Wisconsin Shares
• TANF-Wisconsin Works
• Labor Market Outcomes
• Earnings
• Employment

7
Theoretical link between voucher receipt and
outcomes

• Vouchers stimulate mobility
• Opportunity for re-evaluation
• Disruption
• Economic theory
• Income and substitution effects

8
Theoretical link between voucher receipt and
outcomes

• Social Outcomes
• Move to a better neighborhood
• Change structure of household
• Ambiguous effect on public program participation
• Labor Market Outcomes
• Short-term disruption in employment
• Long-term moves to areas with better employment
  opportunities

9
Data and Estimation Sample

• Data
• Wisconsin administrative data supplemented with
  U.S. Census data
• Sample
• All cases applying for or receiving Food Stamps
  between 2000 and 2003
• Identified two groups voucher recipients and
  nonrecipients
• Calendar year cohorts
• Pooled sample

10
Estimation Method

• Propensity score matching
• Estimate probability of rental subsidy receipt
• Rich set of covariates
• Match voucher recipients to members in the
  control group
• Nearest neighbor matching method
• Matching procedure succeeds in eliminating bias
  on all observed covariates
• Labor market, Neighborhood, and Household
  Composition-Mean comparison
• Public Program Participation- Regression framework

11
Results

• Social Outcome Results

12
Neighborhood Characteristic Results
Where applicable, t-stat in parentheses below
point estimate
13
Case Composition Results
Where applicable, t-stat in parentheses below
point estimate
14
Child Care Results- Eligible Cases
Estimates in bold indicate significance at plt.05
level
15
TANF/Wisconsin Works Results- Full Sample
Estimates in bold indicate significance at plt.05
level
16
Results

• Labor Market Outcome Results

17
Work Effort and Earnings Results- Full Sample
Where applicable, t-stat in parentheses below
point estimate
18
The Annual Earnings Pattern Pooled Cohorts
19
Results

• Subgroup Results

20
Subgroup Results

• Patterns we see in full sample are generally
  present in subgroups as well
• Case composition
• Adult loss in base year especially prevalent
  among young, female, rural, single parents
• Child care participation
• Effect of voucher greatest among females,
  Hispanics, and Milwaukee residents
• TANF participation
• Effect of voucher greatest among females, young,
  urban areas, and families with children

21
Earnings Results- Selected Subgroups
Where applicable, t-stat in parentheses below
point estimate
22
Earnings Results- Selected Subgroups
Where applicable, t-stat in parentheses below
point estimate
23
Conclusions

• Vouchers provide opportunity for re-evaluation
• Living situation
• Employment
• Public benefits
• Also can cause short-term disruptions
• Effects appear to vary by demographic subgroup
• Future Work
• Additional programs
• Additional estimation strategies