The LIHTC Effect
A published study about the long-term effect of LIHTC housing on children sheds light on how the program successfully benefits children's future educational aspirations and future earnings.


How Has LIHTC Improved People’s Lives?

Elena Derby built her research off a prior study published in 2016 by three economic professors from Stanford and Harvard universities, who explored various economic and social impacts from the Section 8 affordable housing program.

Derby’s new research focused primarily on the LIHTC program and how much “we know whether access to subsidized housing funded by the LIHTC improves people’s lives in measurable ways.”

The study followed the economic and educational outcomes of adults who lived inLIHTC housing as children from 2000 to 2012.

Annual earnings in adulthood (between ages 24 and 36) were observed through tax returns, information returns, and information gathered from the HUD database.

Higher education achievements were gathered from 1098-T tuition statements.  


The LIHTC Effect

Derby discovered a trend that “spending a longer amount of time growing up in LIHTC housing has a positive and statistically significant effect on both earnings and education” for children. She coined her research “the LIHTC effect.”

The study confirmed that

·      For each additional year spent in LIHTC housing, children are 3.5 percent more likely to enroll in 4+ years of higher education and 2.7 percent more likely to enroll in2+ years.

·      If a child moved into LIHTC housing at age 11 and stayed until age 18 (seven years), he was 24.4 percent more likely to enroll in 4+ years of higher education than a child who moved into LIHTC at age 18 for only one year.

·      Individuals who lived in LIHTC housing as children earned approximately 3.2 percent more annually as adults for every additional year spent in LIHTC housing.

·      Children who moved into LIHTC housing at age 11 and stayed until age 18 were found on average to earn 23.7 percent more income than children who moved into LIHTC housing at age 18.



So, what does this mean for LIHTC housing? LIHTC housing’s short-term and long-term effect on low-income families is positive and rewarding. In other words, the LIHTC program matters.

Derby surmised that LIHTC housing built in affluent neighborhoods might offer better,well-funded schools for children, and peer influence and social expectations can lead to a greater likelihood of pursuing higher education and creating abetter life for the rising generation.

New LIHTC developments have a revitalizing effect on low-income neighborhoods, citing increased housing prices, decreased crime rates, and further racial and economic diversification.

Children who may have endured frequent relocation find stability in LIHTC housing. It alleviates homelessness and offers a safer environment for families.