Institutions for Housing Subsidization: The Case of Low-Income Housing in China

Institutions for housing subsidization are an important type of institutions for redistribution. They are dominated by public housing and social housing, which are characterized by (1) public ownership or social ownership, (2) management board not held accountable to the recipients, and (3) low-powered incentives. I argue that they are institutional arrangements to resolve the over-subsidization problem, i.e. welfare recipients trying to be over subsidized. This problem is especially acute with housing, for which the measurement cost is high. The down side of public housing and social housing is internal management cost and possible mistakes in resource allocation. Case studies on two public housing communities in Chongqing, China are presented for empirical support to my theoretical arguments. It is also found that market institutions such as property management company (PMC) can help to enhance efficiency.