Housing vouchers reduce residential crowding

Abstract

Prior research shows that expanding the Section 8 Housing Choice Voucher program has varying price effects on different parts of the rental housing market. While recipients will certainly benefit from the added vouchers, there is ambiguity in the impacts on quality of life for non-recipients in the broader housing market. Excessive crowding in homes, dubbed overcrowding, is one measure of quality of life because overcrowding can lead to adverse outcomes such as stunted child development, adverse mental health, and an increased risk in spreading infectious diseases such as COVID-19. This paper makes use of an exogenous increase in the supply of Section 8 housing vouchers in a panel setting to ascertain the effectiveness of a program provided at the federal level in tackling housing overcrowding throughout the nation. Estimation of a linear probability model shows that adding vouchers reduces the incidence of overcrowding: a 10% increase in the supply of vouchers reduces the likelihood that a housing unit is overcrowded by 0.081 percentage points. The mechanism behind the effect is shown to correspond with anecdotes about overcrowding: households experiencing misfortune, financial difficulties, or other tenuous circumstances double-up with higher-income households. Hence, a voucher enables the troubled household to move into more suitable living arrangements.