Working Paper

Homelessness

Abstract: We present a dynamic general equilibrium model of homelessness calibrated to the U.S. data and evaluate the effectiveness of several policies in the fight against homelessness. The model is designed to capture the most at-risk groups, producing a diverse homeless population that includes a significant portion experiencing short-term homelessness due to labor market shocks and a smaller portion facing chronic homelessness mostly due to health shocks. Our policy experiments reveal that the existing housing voucher program effectively reduces homelessness especially when the general equilibrium effects are accounted for. We show that increasing the reach of the program for eligible individuals can lead to further declines in the aggregate homeless rate relative to alternative forms of subsidies. However, policies targeted to help decrease homelessness are not as popular as general poverty reduction tools such as cash subsidies, which generate a larger welfare gain in our experiments.

Keywords: Income Shock; General equilibrium; Health shock; Homeless; Housing;

JEL Classification: H20; E20;

https://doi.org/10.21034/iwp.103

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Opportunity and Inclusive Growth Institute Working Papers

Publication Date: 2024-10-22

Number: 103