The Impact of Federal Homelessness Funding on Homelessness

Originally published in Southern Economic Journal

Federal spending on homelessness has increased significantly in recent years. I estimate the relationship between federal homelessness funding and homeless counts in 2011, 2013, and 2015 cross sections. I instrument for funding using a community's pre-1940 housing share, a key variable in an originally unrelated funding formula borrowed for homelessness grants. Funding increases sheltered homelessness; meanwhile, funding is unrelated to unsheltered homelessness. Lower bound estimates suggest that the minimum cost of reducing unsheltered homelessness has increased over time, from $16,400 in 2011 to $20,800 in 2013 to $50,000 in 2015. In 2013, an additional $1 thousand dollars corresponds to a .309 higher homeless rate per 10,000 people. The effect is larger for families than individuals. Funding is positively related to chronic homelessness and is unrelated to youth and child homelessness. My results suggest limitations on federal funding's ability to reduce homelessness among some of the most marginalized groups in society.

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