The effects of public housing on internal mobility in Hong Kong

Public housing represents a sizable subsidy to housing cost and it has to be strictly rationed among competing users. When rationing occurs, resources may not be allocated to their most valuable uses because people cannot effectively convey the intensity of their preferences. This study investigates the hidden costs of public housing from the perspective of the misallocation of housing units to tenants and examines how this misallocation affects these tenants' lives. This paper shows that public housing occupants are more immobile than private housing occupants. Conditional on moving, however, public housing occupants are more likely than their private housing counterparts to have to move farther away from their original district or region of residence. Due to the lack of choice and mobility, public housing occupants are also less likely to work in the same district or region as their place of residence.