Abstract:
During economic downturns, urban policymakers must evaluate whether housing aid effectively prevents evictions. Analyzing 207,203 observations from the Understanding America Study during COVID-19 and using recursive bivariate probit models with instrumental variables, we find that housing aid is linked to a 4.3% reduced likelihood of eviction. For households with access to credit, this reduction increases to 6.2%. An inverted-U trend appears: households with one to two credit sources experience over 39% reductions, while those with three or more credit sources see smaller effects of approximately 4.1%. This trend indicates financial stability rather than overleverage; more credit sources are associated with higher creditworthiness and less reliance on aid. These findings were consistent across the different estimation methods. This implies that combining housing assistance with financial inclusion strategies that emphasize credit quality over quantity could improve eviction prevention during economic downturns.
