The Effects of Public Low-Income 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 p<.05 level

15. TANF/Wisconsin Works Results- Full Sample Estimates in bold indicate significance at p<.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