| Abstract: | Housing benefits and income transfers realized by Section 8 program participants are examined. The distribution of benefits depends on income eligibility rules and the level of Fair Market Rents, the latter establishing an upper limit on the quality of housing available to households. By establishing Fair Market Rents for an entire urban area, program regulations tend to exclude the poor from better quality neighborhoods. Subsidy costs for newly constructed units are twice as high as for existing units. Income eligibility rules are such that many more households are eligible than can be supported, creating difficult problems of horizontal equity. Lowering Fair Market Rents or raising the required share of tenant's income paid in rent would tend to reduce these horizontal equity problems. |
