Housing Production Subsidies and Neighborhood Revitalization: New York City’s Ten-Year Capital Plan for Housing

[...]This paper reexamines the debate over the appropriate formof housing assistance. First, we briefly summarize and evaluate arguments in favor of demand-oriented housing subsidies(such as Section 8 vouchers) and supply-oriented housingsubsidies (such as production subsidies). We conclude thatalthough demand-oriented subsidies are preferable to supplyorientedsubsidies on a number of grounds, governmentsupport for production may, at least theoretically, be justifiedas a way to promote positive spillover effects and neighborhoodrevitalization. Whether sufficient spillovers exist is, in theend, an empirical question. Although much of the existingresearch finds little evidence of spillover effects, our findings onthe New York City experience suggest that spillovers may besignificant and large enough to justify government support forproduction.[...]