Housing Subsidies and Urban Household Behavior*

This paper examines how housing subsidies affect housing and location demands in a monocentric market, identifying the extent to which policies prompt targeted populations to congregate more or less intensely in the central city. Various subsidies are studied: rents based on ability to pay, lump‐sum housing aid, housing vouchers, and subsidies based on percentage of rent. The demand effects are seen to hinge critically upon whether or not subsidies are tied to binding consumption restrictions. Policy impacts are shown to be identical for both CBD employed and locally employed consumers targeted for the housing policies.