Poverty concentration and the Low Income Housing Tax Credit: Effects of siting and tenant composition

Research output: Contribution to journalArticle

Abstract

New evidence on the effects of growing up in neighborhoods of concentrated poverty has heightened policy interest in understanding the role housing programs may play in shaping the distribution of poverty. In particular, as the nation's largest source of funding for the construction of affordable rental housing, the Low Income Housing Tax Credit (LIHTC) could play a critical role in shaping the distribution of poverty. This paper examines whether the LIHTC affects the concentration of poverty by examining who lives in tax credit developments in different neighborhoods, and how neighborhoods and metropolitan areas change after LIHTC developments are built. Through assessing both the effects of siting and tenant composition, we find little evidence that the LIHTC is increasing the concentration of poverty – and we find some evidence that it is reducing poverty rates in high-poverty neighborhoods. We also make suggestions for states who want to use LIHTC to do more to deconcentrate poverty.

Original languageEnglish (US)
Pages (from-to)49-59
Number of pages11
JournalJournal of Housing Economics
Volume34
DOIs
StatePublished - Dec 1 2016

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Low-income housing
Poverty
Tax credits
Funding
Metropolitan areas
Rental housing

Keywords

  • Housing policy
  • Low income housing tax credit
  • Poverty concentration

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

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title = "Poverty concentration and the Low Income Housing Tax Credit: Effects of siting and tenant composition",
abstract = "New evidence on the effects of growing up in neighborhoods of concentrated poverty has heightened policy interest in understanding the role housing programs may play in shaping the distribution of poverty. In particular, as the nation's largest source of funding for the construction of affordable rental housing, the Low Income Housing Tax Credit (LIHTC) could play a critical role in shaping the distribution of poverty. This paper examines whether the LIHTC affects the concentration of poverty by examining who lives in tax credit developments in different neighborhoods, and how neighborhoods and metropolitan areas change after LIHTC developments are built. Through assessing both the effects of siting and tenant composition, we find little evidence that the LIHTC is increasing the concentration of poverty – and we find some evidence that it is reducing poverty rates in high-poverty neighborhoods. We also make suggestions for states who want to use LIHTC to do more to deconcentrate poverty.",
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