Workforce Disincentive Effects of Housing Allowances and Public Housing for Low Income Households in Australia

Abstract

There is emerging interest in whether, and how, different types of rental housing assistance contribute to disincentives to entering paid work or working more hours. Using Australia as an example, the article compares the theoretical effects of housing allowances and public housing in terms of work disincentives. It also reports on empirical research that examined how households perceive such disincentives and the degree to which they affect decision making about paid employment, based on a survey of 400 public and private renters searching for paid work in Sydney and Melbourne. The research found that most households understood how their rental housing assistance would change when moving into work, and that this had little effect on private renters in receipt of housing allowances but did affect a sizeable minority of public renters. Job seekers identified the main difficulties in getting a job as age discrimination by employers, lack of personal skills and self-confidence, and location of housing relative to jobs. This highlights the importance of assessing the locational outcomes for households of different types of rental housing assistance, including housing allowances. 1