The curious incidence of rent subsidies: evidence of heterogeneity from administrative data

This paper provides new evidence on the incidence of rent subsidies. We use administrative panel data on subsidy recipients in the UK and exploit a natural experiment in which entitlements were cut for about a million households. In the short-run, about 90% of the incidence of the cuts is found to be on tenants. We also uncover an important dimension of heterogeneity in the balance of incidence between tenants and their landlords. We find that the share of the incidence of the cut that falls on landlords, rather than tenants, is higher in cases where the previous system looked more generous relative to tenants’ likely housing needs. This is informative about the likely incidence of alternative rent subsidy schemes.