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date: 24 August 2019

Abstract and Keywords

This article examines the impact of correcting official poverty rates for geographical differences in the cost of living and housing. It calculates revised poverty thresholds by using improved housing-price indexes and by including in household resources the market value of housing subsidies. High housing costs increase poverty thresholds and the poverty rate, other things being equal. Subsidized housing increases household resources and reduces the poverty rate, other things being equal. Each of these factors working separately and together can impact poverty rates across regions, demographic groups, and selected cities. Adjusting thresholds and adding the market value of housing subsidies would reduce the aggregate poverty rate by 0.6 percentage points. Including the market value housing assistance would decrease the poverty rate for blacks and female-headed households by two percentage points. A voucher entitlement program is proposed that would cost no more than what is currently spent on housing assistance. While the impact of this program on the poverty rate is ambiguous theoretically, a positive by-product is that it would reach more of the poorest households.

Keywords: poverty rates, geographical differences, cost of living, housing costs, housing subsidies, voucher entitlement program

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