Economic Aspects of Low Income Housing Policy in the Urban Economy

Abstract

Of the many problems which confront urban policy makers and planners at the present time, that of housing the lower income groups is one of the most general and the most pressing. The term “lower income groups” is used advisedly and not merely as a euphemism for “the poor” who live in “slums”. Housing quality covers a wide spectrum from the most luxurious to the most spartan and while on the whole it is closely related to the current income of the household, the association is not perfect. The level of income is of vital importance in achieving a given level of quality but the contraction of incomes towards the end of the lifespan of a household is not necessarily associated with a lowering of housing quality. Equally, the slum is a multi‐dimensional concept which though easy to recognise is difficult to define. Not all housing occupied by low paid workers are slums and not all slum‐dwellers are poor. The term “slum” often denotes a type of neighbourhood in which flourishes a sub‐culture containing its own socio‐economic stratification. The solution of low income housing problems is obviously closely bound up with the question of slums but neither begins nor ends with it. The purpose of this paper is to examine the causes of the housing market manifestations of the problems of urban blight or congestion from the economic point of view (i.e. to consider the operation of the market mechanism in allocating resources) and to suggest an approach to the formulation of policy which will achieve an economically efficient distribution of housing resources.