Housing demand and intra‐urban mobility of finnish housing allowance recipients1

In this paper we present results of housing demand and intra‐urban mobility behaviour of new housing allowance recipients in Finland. The theoretical framework is a search model developed by the present author elsewhere. This model suggests that both the probability of searching and of accepting (randomly) received offers are increasing functions of the discrepancy between desired and current housing consumptions. In our empirical analysis we first estimate desired demand functions from our data with a special technique. Then, we use these functions to obtain predictions of desired demands with and without the allowance. These are compared to actual demands which, unlike the desired ones, are affected by prevailing rent regulation and related availability problems. Finally, we use measures of discrepancy between the desired demand with the allowance and the actual pre‐allowance housing demand to explain mobility during the first three years of obtaining the allowance. The actual demand effects of the allowance seem to be small relative to their impact on desired demands, which also are rather small.