Panel Paper: Estimating Effects of Income Support Policies On the Retention of Homeownership Among Vulnerable Families

Friday, November 8, 2013 : 9:00 AM
West End Ballroom E (Washington Marriott)

*Names in bold indicate Presenter

Lawrence Berger, University of Wisconsin, Madison, J. Michael Collins, University of Wisconsin and Timothy Smeeding, Institute for Research on Poverty
There has been growing policymaker attention on homeowner preservation since the housing crisis began in 2008. Programs have focused on housing values and loan terms, but often the trigger for no longer being able to afford a home is an income shock. This paper analyzes the protective effects of income supports for preserving ownership by lower income households. The problem with this research is that income supports are often a signal of distress and could be correlated with exits from owning. We exploit state-period variation in state-level earned income tax credits and unemployment generosity to examine outcome of families losing homeownership. We find positive effects on low-income owners remaining owners based on the relative generosity of their state of residence, controlling for state and time fixed effects. The results suggest income supports are in fact an effective housing support strategy, and perhaps more efficiently administered.

Full Paper: