By Ayşe İmrohoroğlu and Kai Zhao
This paper examines the effectiveness of several policies in reducing the aggregate share of homeless in a dynamic general equilibrium model. The model economy is calibrated to capture the most at-risk groups and generates a diverse population of homeless with a significant fraction becoming homeless for short spells due to labor market shocks and a smaller fraction experiencing chronic homelessness due to health shocks. Our policy experiments show housing subsidies to be more effective in reducing the aggregate homeless share, mostly by helping those with short spells, than non-housing policies. For the chronically homeless population, a means-tested expansion of disability income proves to be effective. We also find that some policies that result in higher exit rates from homelessness, such as relaxation of borrowing constraints, help the currently homeless population but lead to a larger homeless share at the steady state by increasing the entry rate.
This is an excellent topic and approach. People are going to debate the assumptions, but this is at least a starting point to better understand what can work to curb homelessness. I am looking forward to what will happen to this paper and what will follow.