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Public Housing and Slums: Cure or Cause?

Rensselaer Polytechnic Institute, Troy, New York

This paper tests the hypothesis that an increase in the supply of public housing causes a substantially offsetting decline in the quantity supplied of competing private units. The statistical results offer little by way of confirmation of this view.

A comparative statics model of the rental housing market is presented from which estimating equations suitable for regression analysis are derived. Data from the US Census are used to estimate the effect of public housing on the private rental sector in 33 cities in New York State. The empirical evidence suggests a 5 to 9 per cent induced decline in private market rents per one per cent increase in the proportion of public units in the total housing stock. No meaningful evidence of private market vacancies, demolitions or dilapidation offsetting to the public units was found.

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