Housing Subsidies, Labor Supply and Household Welfare. Experimental Evidence from Argentina

Produced by: 
CAF
Available from: 
October 2016
Paper author(s): 
María Laura Alzúa
Julián Amendolaggine
Guillermo Cruces
Catrihel Greppi
Topic: 
Labor
Poverty - Inequality - Aid Effectiveness
Fiscal Policy - Public and Welfare Economics
Year: 
2017

We study the impact of a social housing policy program implemented in Argentina, exploiting the random assignment rule to identify the policy's causal effect on labor market and other socio-economic outcomes. In particular, this paper evaluates an intervention that combines access to quality housing at a heavily subsidized cost, the granting of property rights, and relocation in a suburb of Rosario, Argentina's third largest city. In a preliminary analysis, based on administrative social security records, we find that the policy generates a reduction in registered employment by more than 7 percentage points, especially for women and beneficiaries over 50 years of age. We went further and conducted a purposely-designed household survey among a sample of beneficiaries in order to understand the underlying mechanisms and welfare implications of these results. All in all, our analysis points to the existence of an income effect and confirms the registered fall in formal employment and labor force participation. We do not find an increase in informalization, although beneficiaries' perceived access to local job opportunities are signicantly reduced.

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