Institutions for housing subsidisation: the case of low-income housing in China

Institutions for housing subsidisation are an important type of institution for redistribution. They are dominated by public housing and social housing, which are characterised by (1) public ownership or social ownership, (2) a management board not held accountable to the recipients and (3) low-powered incentives. I argue that they are institutional arrangements to resolve the over-subsidisation problem, in which welfare recipients try to be over-subsidised in various ways. This problem is especially acute with housing, for which the measurement cost is high. The down side of public housing and social housing is internal management cost and possible mistakes in resource allocation. Case studies of two public-housing communities in Chongqing, China, are presented for empirical support of my theoretical arguments. It is also found that market institutions such as property management companies can help to enhance efficiency.