Delivering affordable housing and neighborhood quality: A comparison of place- and tenant-based programs

This paper analyzes the relative merits of large place- and tenant-based housing programs in Finland in terms of housing affordability and neighborhood quality. Using hedonic regression methods and household micro data, we find that the rent savings to public housing tenants are considerable and comparable in size to the housing allowance. Furthermore, this public housing subsidy is less targeted towards low-income households than the housing allowance. At the same time, low-income public housing tenants live in poorer, less educated and lower quality neighborhoods than similar low-income households living in private rental housing. This suggests that place-based programs may lead to more segregation than tenant- based alternatives even when neighborhood mixing is an explicit aim of the program, as is the case in Finland.