Abstract
There is an active debate about whether housing assistance policies distort labor market incentives. We investigate the so far neglected interaction between housing subsidy recipients’ residential mobility and their job mobility. The setting for this is a large-scale, object-targeting housing assistance program in Switzerland launched in 1975. The WEG program offered substantial rent subsidies to low-income households for a limited duration. Leveraging variation in the timing of subsidy expiration in an event study, we show that WEG tenants have reduced residential mobility as long as subsidies are paid out but increase mobility once subsidies expire. Recipients’ labor market response to subsidy expiration, however, is limited or even negative. Furthermore, we find that WEG out-movers, on average, experience an improvement in dwelling and neighborhood quality, but there is large variation in outcomes.
Moretti, Luca