Work incentives and rent: evidence from Glasgow housing associations

Concern has been expressed by a number of commentators that the result of UK rent increases, in both the private and social rented sectors, has been a worsening of tenants' incentive to work. Although a number of studies have simulated thepossible effects on labour supply of rent rises, there are no published empirical estimates in the UK of theactual effects. This paper examines the various aspects of the rent-work incentive relationship, and uses data on Glasgow housing association tenants to estimate the relationship between rent rises and labour supply. The UK housing benefit system is described, followed by a brief overview of the previous literature. The various links between rents and work are examined in detail, and simple regression results are reported on the relationship between standardised rent increases and employment decisions. The results show that for male workers, the decision to take work is positively related to rent increases, but for women it is negatively related. In deciding between unemployment and working part-time, rent rises have a positive effect, whereas the effect is negative in the decision to work part-time or full-time. The overall effect of rent increases on labour supply in two-worker households is found to be negative