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ABSTRACT In this paper the meaning of the term 'housing subsidy' is reviewed and the theoretical and practical problems of measuring the value of housing subsidies and making comparisons between countries is demonstrated. The definitions of both 'subsidy' and 'housing subsidy' are questioned. The paper shows that what is and is not a housing subsidy is often ill defined. More rigorous analysis, it is argued, requires the use of 'benchmarks' against which the changes initiated by subsidies can be judged. The use of alternative benchmarks with respect to home owners, tenants and landlords in several European countries is demonstrated.
Introduction
Whether or not housing is being subsidised and the degree of subsidisation are important political and economic issues. In the context of the European Union more heavily subsidised housing in one country than another may have significant consequences for labour costs, labour mobility and industrial competitiveness. In a housing policy context, subsidies raise issues about both the efficiency and the equity of resource allocation. The looseness or simply a lack of definition of 'housing subsidy' devalues debate about housing policy changes.
Formal definitions of subsidies provided in the economics literature are, on close inspection, open to a variety of interpretations. These are discussed together with an examination of their application to housing. The discussion emphasises the necessity of viewing housing subsidies in the context of the fiscal and housing systems within a country and shows the inadequacy of generalisations about what to count and what not to count as a housing subsidy. The value of 'benchmarks' against which the deviations produced by subsidies can be judged is examined with the aid of information for Belgium, Denmark, France, England, the Netherlands and Germany. The analysis includes owner occupied and rented housing.
It is clear that the 'value' of housing subsidies cannot be determined simply by examining public expenditure or tax concessions. Any estimate of what a housing subsidy is worth, in the sense of the impact which it has on housing costs and housing consumption and production, requires detailed empirical modelling of housing systems.
Subsidy as a General Term
There is a lack of consensus on how to define subsidies. Dictionary definitions suggest that a subsidy is "help, aid or assistance" or "a grant or...