The Long-Run Effects of Subsidized Housing on Travel Behavior

Many cities in developing countries are experiencing rapid urbanization along with deteriorating traffic congestion and air quality. A long-term approach to alleviating traffic congestion is to provide subsidized housing for the expanding population near employment centers. We exploit a sharp change in the eligibility for subsidized housing generated by China’s market-oriented housing reforms to study the long-run effects of subsidized housing on commuting distance and automobile use and ownership in Beijing. Providing subsidized housing located close to the city center causes individuals to have substantially shorter commuting distances. Subsidized individuals are less likely to drive to work but have similar rates of automobile ownership. The results suggest that providing housing near employment centers can have long-lasting effects on commuting patterns and automobile use.