New Research Shows High Exit Rates, No Economic Gains from Housing Relocation Programs

January 9, 2017
By Doug Gavel

Government housing programs relocating residents from poor, dense, urban neighborhoods into nearby suburbs were designed with the goal of helping break the cycle of poverty. Advocates argued that a change of environment could greatly enhance the economic, educational and social opportunities for those who would otherwise be trapped in poverty. 

But the programs instituted in several American cities have had mixed results. Research analyzing the Moving to Opportunity program, launched in the mid-1990s, showed that while participants experienced better physical and mental health, their rates of economic self-sufficiency were barely if at all impacted.

A new research paper, published in the American Economic Journal: Applied Economics, is the first to examine the long-term impacts of slum-to-suburb housing relocation programs in a developing country.  “Moving to Opportunity or Isolation?” is co-authored by Rohini Pande, Mohammed Kamal Professor of Public Policy at Harvard Kennedy School. 

Pande and her fellow researchers tracked the fate of 497 residents in the city of Ahmadabad, within the Indian state of Gujarat, who were chosen by lottery to move from inner city slums into improved housing on the periphery of the city.

“Fourteen years later, winners report improved housing but no change in tenure security, family income, or human capital,” the researchers write. “Winners also report increased isolation from family and caste networks and reduced informal insurance. We observe significant program exit: 34 percent of winners never took up subsidized housing and 32 percent eventually exited.”

Pande and her co-authors argue that this and similar research studies hold important lessons for lawmakers in India, the United States, and elsewhere.

“Our results suggest negligible long-run economic value of this expensive public program and point to the importance of considering social networks in housing programs for the poor,” they conclude. 

Tags: Housing Housing

Rohini Pande

Rohini Pande, Mohammed Kamal Professor of Public Policy at Harvard Kennedy School

 


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