PMRD Working Paper: Markov Chain Model of Rent Burden in the Housing Choice Voucher Program
This study models rent burden in the Housing Choice Voucher Program as a Markov Chain. The model predicts rent burden with program tenure, using longitudinal household data for 2000 through 2009. Results indicate rent burden increases for many years after admission. Consistent with results for unassisted low-income families, the model also predicts considerable mobility across burden categories over time. The rent burden formula indicates that HUD policy and housing agency policy should not be considered in isolation. Estimates imply that their interaction has an effect large in both magnitude and statistical significance. A limitation of the Markov Chain model is that it doesn't estimate variance; I demonstrate a simple method for doing so via bootstrapping.