By Pierre-Loup Beauregard
Governments around the world spend billions on rental assistance, hoping to break the intergenerational transmission of poverty. Previous research has emphasized two channels in which housing assistant impact children: income effects from the subsidy itself, and neighbourhood effects from moving to areas with better schools and less crime. My research on Canada's largest public housing programs uncovers a third mechanism that has received far less attention: the reallocation of parental time from work to home.
The Paradox
Using administrative tax records that track families over decades, I studied what happens when parents in Toronto and Montréal enter rent-geared-to-income housing, where tenants pay 25–30% of their family gross income as rent. The results seem contradictory at first glance.
Parents entering social housing earn about $2,400 (~20%) less per year. They're less likely to be employed, and those who keep working reduce their hours. By traditional metrics, this looks like a policy failure: the program heavily discourage work.
But their children tell a different story. Kids who spend more time in social housing end up earning more as adults, are more likely to attend post-secondary education, and are less dependent on welfare. Each additional year of childhood exposure increases adult earnings by about $260 annually. That is, a child who entered four years earlier would earn over $1,000 more per year as an adult: modest, but meaningful over a lifetime."
It's About Time
How can a program that reduces parents' work also boost their children's outcomes?
The conventional explanations don't hold up. Families' net-of-housing income stays roughly flat after entering the program: what they save on rent, they lose in reduced earnings. So this isn't about having more money to spend on children. And the neighbourhoods they move into aren't particularly better; if anything, they score slightly worse on measures of how good the area is for child development.
What changes is time. When parents work less, that time doesn't disappear, it gets reallocated. And the evidence suggests some of it flows toward children.
To pin this down, I exploited a feature of the public housing programs: families have little control over which building they're assigned to. Some end up close to their previous home and workplace; others are displaced across the city. Longer moves disrupt commutes and job continuity, forcing larger reductions in labour supply, essentially creating random variation in how much parents cut back their hours.
The pattern is striking. Children whose parents experienced bigger work reductions (driven by being assigned farther away) show bigger gains as adults. And critically, children whose parents didn't reduce their work hours show no gains at all, regardless of how far they moved. Distance itself doesn't appear to help kids. What matters is whether parents ended up spending less time at work.
Rethinking the Trade-offs
This finding reframes a long-standing debate in social policy. Programs that encourage work are often celebrated for promoting self-sufficiency, while those perceived as discouraging work are deemed as counterproductive. But this framing miss something important: time is a resource too, and for children, parental time may be irreplaceable.
The economics here are intuitive once you see them. Rent-geared-to-income housing affects work decisions through three channels. First, an income effect: the rent subsidy frees up resources, allowing families to buy more leisure. Second, a substitution effect: because rent rises with earnings, each additional dollar earned is worth less, reducing the incentive to work. Third, and most novel, an insurance channel: because rent adjusts downward when earnings fall, tenants are partially insulated from adverse shocks, reducing the return to maintaining higher hours. Parents can afford to pull back from precarious, unpredictable work and invest that time at home instead.
My estimates suggest this isn't just good for families; it's a good deal for taxpayers too. Using a Marginal Value of Public Funds framework, I find that spending an additional dollar on this policy would generates about $1.43 in social benefits. The gains to children, accumulated over their lifetimes, more than offset direct cost and the fiscal externality of parents earning less (and paying less taxes).
What This Means for Policy
The implications cut against some common assumptions. If we design housing programs purely to minimize parents’ labour supply response, we may inadvertently undermine the benefits to children. Conversely, features that look like "work disincentives" might actually be an incentive for investments in the next generation.
This doesn't mean work requirements are always wrong, or that we should ignore labour supply effects. But it suggests we need a more complete accounting. The parent who leaves a chaotic shift-work schedule to help with homework isn't failing to be self-sufficient. They're making a choice that may pay dividends for decades.
Public housing debates often focus on where to build, how much to build, and who gets in. This research adds a new question: what happens inside the home once families are housed?
About the Author
Pierre-Loup Beauregard is an Economics Ph.D. candidate at The Vancouver School of Economics, University of British Columbia
His research focuses on how public policy shapes poverty in cities, with a particular interest in social housing and homelessness. He also works on various topics in labour economics. Visit his website: https://www.pierreloupbeauregard.org/
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