One way of reducing poverty is by increasing the ability to pay. And one mechanism is to give cash directly to low-income people either as cash itself or through a voucher system.
This piece of research from the Urban Institute looks at using vouchers (i.e. one type of conditional cash transfers) to help families pay for housing. The theory goes that helping families pay rent (the largest part of household budgets), they are less likely to experience economic stress and food insecurity.
The research is very optimistic about vouchers. But, it is very important to point out the potential impacts of using vouchers as welfare support on the system.
This piece of research from the Urban Institute looks at using vouchers (i.e. one type of conditional cash transfers) to help families pay for housing. The theory goes that helping families pay rent (the largest part of household budgets), they are less likely to experience economic stress and food insecurity.
The research is very optimistic about vouchers. But, it is very important to point out the potential impacts of using vouchers as welfare support on the system.
- Vouchers can create perverse incentives. Low-income families may go to shelters in order to be eligible for vouchers. This points to a need to identify the deeper problem within the system. Families that leave housing for shelters to get vouchers to go back to housing must be thinking about things that we can't see. What are the incentives to drive this kind of behaviour? Who is making that decision to move? Is it the family career or is there pressure coming from elsewhere? What is the quality of the housing? What makes shelters (and vouchers) so attractive compared to housing?
- Vouchers can create free rider effects and increase welfare and reduce employment. However, this is a simplistic understanding of the problem. The article points out that we should also keep in mind that helping families get jobs and better-paying jobs is not just about getting rid of disincentives to work; it is also about opportunities for people to build job skills, and access basic benefits, such as health insurance.
- Vouchers can be expensive. A systemic analysis would look at the costs of different options and determine if vouchers is the most value-for-money considering the systemic constraints. Additional information would be needed to build a value/cost model: How long do families remain on vouchers? How do the ongoing costs of vouchers compare with not providing vouchers (i.e. families cycling in and out of shelter)? How do count families that cycle in and out of shelter (i.e. churn)?
