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A Structural Model of the Effects of Housing Vouchers on Housing Consumption and Labor Supply Author: Scott E. Davis Dissertation School: University of Virginia Pages: 177 Publication Date: January 2008 Availability: Access Number: 10827 Abstract: The Section 8 Housing Choice Voucher program provides low-income families with a subsidy that pays a portion of the rent of a housing unit that the family chooses from the private housing stock. This dissertation develops a structural model of household consumption decisions over housing, leisure, and non-housing goods that is used to evaluate how the Section 8 program affects the consumption and labor supply decisions of participating families. A major contribution of this work is that it develops a methodology whereby sophisticated models of how social programs affect behavior can be estimated using a combination of administrative and other data. In the model, households maximize utility subject to a three-dimensional, non-linear budget constraint that accounts for the housing voucher subsidy in addition to income taxes and other transfer programs. The economic model also incorporates selection into the Section 8 program. I use administrative date from the U.S. Department of Housing and Urban Development along with data from other sources to estimate the parameters of the model using a maximum simulated likelihood procedure that is adjusted to incorporate certain aggregate moment restrictions. This adjustment is necessary to account for the fact that the administrative data includes information on only recipients of Section 8 vouchers. Using the estimated parameters of the model, I find that, among participating families, Section 8 housing vouchers induce large increases in housing consumption, sizable decreases in non-housing consumption, and substantial reductions in the annual labor supply of household heads. Specification tests indicate that the model performs well in explaining housing consumption but over-predicts labor force participation. I also perform two counterfactual policy exercises. The first indicates that a modest reduction in the size of the voucher subsidy would have small effects on the consumption patterns of current voucher recipients and would induce few families to leave the program. The second gives an example of how the model can be used to analyze comprehensive welfare reform involving multiple transfer programs. The model and methodology developed in this dissertation should be useful for researchers interested in using administrative data to study the effects of social programs. |
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