Academic journal article Monthly Labor Review

Foreign Housing Voucher Systems: Evolution and Strategies

Academic journal article Monthly Labor Review

Foreign Housing Voucher Systems: Evolution and Strategies

Article excerpt

Foreign housing voucher systems: evolution and strategies

The "housing voucher' or "housing allowance' concept is emerging as the principal tool in U.S. housing subsidy policy. In Europe, governments have effectively operated national housing allowance systems for several decades with a wide variety of strategies. This report examines foreign experience.1

Two fundamental judgments underlie all housing allowance2 systems: (1) there are large numbers of families that cannot obtain minimum standard housing by paying a reasonable portion of their income, and (2) the most needy households should be given first priority in the payment of housing subsidies. However, there have been notable differences among housing allowance systems in their approach to the most needy households. There have been different definitions of "most needy,' and the principle of priority for the most needy has often been blended with other important economic and social purposes.

The strategic role of the housing allowance concept as it has developed in other countries can be best understood by delineating eight models of the concept: large family hardship model; elderly hardship model; rent harmonization model; excessive shelter-to-income model; tandem-new construction model; social stability model; labor mobility model; and family crisis model. (See exhibit 1.)

Large family hardship model

The pre-World War II European perception was that wages of the working classes were more or less fixed over time. Other things being equal, therefore, an additional child in the family--and families tended to be big--led to a worsening of life in two major ways: a smaller portion of family income was available for the consumption of each individual; and each person had less physical space within the household.

In other industrialized nations, social concern for the welfare of children in large working class families found political expression in two ways rather different from the American experience, that is, in the establishment of family allowance systems (sometimes called children's allowances) and in social housing programs. Family allowance systems, spearheaded by the International Labour Office created under the League of Nations in 1919, were adopted in most of the highly industrialized countries providing financial assistance for each additional child in the family to avoid a lowering of standards of living.3 And social housing (more or less the European equivalent of U.S. public housing) programs were promoted to help eliminate slums.

Because slums could only be avoided or eliminated by constructing more housing, it was logical that financial assistance should be in the form of producer subsidies to the builder, that is, mainly public and nonprofit agencies acting on behalf of the poor. The new social housing was then normally allotted on the basis of a point system to the most needy, which tended to be the largest families.

As children grow up and leave, large families become small families. But under the housing regulations of most countries, families were not required to vacate subsidized housing as their level of need changed, for example, as the size of family shrank or as the level of income rose; rather they continued to occupy old units, even passing them on to the next generation. In this milieu, after World War II, the International Union of Family Organizations became one of the leading protagonists for a housing allowance system based primarily on the large family rationale. It had an important influence in many countries, especially Belgium, France, Luxembourg, the Netherlands, and Scandinavia.4

In the view of the International Union of Family Organizations, the key to providing adequate succor to the most needy was the development of "individual compensation for housing expenses . . . as closely adapted as possible to the circumstances of the household with children. …

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