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Housing subsidies and work incentives in Great Britain

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Bingley, Paul and Walker, Ian (2000) Housing subsidies and work incentives in Great Britain. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.559).

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Abstract

In Great Britain the move away from rented accommodation to owner occupation is leaving behind a large group of households with low incomes, wages and hours of work, and high housing costs, who are increasingly in receipt of welfare transfers. The disparity along all of these dimensions between renters and owner occupiers has continued to grow since the 1970’s.

The relationship between housing costs, wages and transfer programmes is complex and yet plays an important part in determining the incentive to work for individuals in low income or high housing cost households. While it is true that many individuals who are in these categories are out of the labour force (retired, sick and disabled), there are many who are not and whose incentive to seek work, or to work harder if already in work, could be modified by directly changing the rent levels they face or indirectly via changes to the structure of programmes designed to subsidise housing for the poor.

Here we estimate a static discrete choice labour supply model which allows for housing benefit programme participation. We use samples of 42491 married women and 13340 unmarried women drawn from Great Britain Family Resources Surveys 1994/5-97/8. We find that women are quite responsive to labour supply incentives, housing benefit income has similar incentive effects to earned income which suggests any "stigma" is small. Our analysis is complemented by simulating housing benefit and direct rent subsidy reforms.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HV Social pathology. Social and public welfare

Divisions:

Faculty of Social Sciences > Economics

Library of Congress Subject Headings (LCSH):

Housing subsidies -- Great Britain, Welfare economics, Labor supply -- Great Britain, Employee motivation -- Great Britain

Series Name:

Warwick economic research papers

Publisher:

University of Warwick, Department of Economics

Place of Publication:

Coventry

Official Date:

13 April 2000

Dates:

Date	Event
13 April 2000	Published

Number:

No.559

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Description:

Version 2.001

Funder:

Economic and Social Research Council (Great Britain) (ESRC), Leverhulme Trust (LT), Great Britain. Department of the Environment, Transport and the Regions (DETR), University of Keele

Grant number:

R000233462 (ESRC), grant F/368/F (LT),

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