ESRI Policy Seminar: The Incidence of Targeted Housing Subsidies: Evidence from Reforms to UK Housing Benefit

Venue: ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2

Speaker:
Robert Joyce is a Senior Research Economist in the Direct Tax and Welfare sector at the Institute for Fiscal Studies. His main research interests relate to income distribution and the design and effects of the tax and benefit system. He has written and spoken widely on issues around inequality, poverty and welfare reform.

Abstract:
During 2011 and 2012 the UK government reduced the generosity of the housing subsidy it provides to low-income private renters. We estimate the incidence of this change on the recipients and on their landlords, using administrative monthly panel data on the universe of subsidy recipients. We exploit the phased roll-out of the reforms to estimate separate effects on rents for new claimants and for existing claimants, using different identifying assumptions in each case. Both sets of estimates are extremely similar. Rents paid by subsidy recipients were affected little overall. As a result, about 90% of the incidence of the reforms was on tenants. This is substantially higher incidence on tenants than previous studies have found for other housing subsidy reforms, in the UK and elsewhere. There is important heterogeneity however: the estimated incidence on landlords was higher for groups that saw particularly large reductions in their subsidy. Taken together, the results suggest that the incidence of reforms to housing subsidy regimes can vary substantially within the range of real-world rental markets.