The Impacts of an Unconditional Cash Transfer for Homeless Families: Experimental Evidence from Illinois

• In Event: Preventing Future and Subsequent Homelessness

Abstract

Family homelessness represents one of the most extreme forms of economic hardship in the United States, imposing substantial costs on both affected families and society. Despite the severity of this problem, there is limited causal evidence on how to help homeless families exit homelessness once they enter the shelter system. The fiscal burden alone is considerable: emergency shelter for families costs approximately $192 per night in New York City and $123 per night in Washington, D.C., with families staying substantially longer in shelters than single adults: 113 days versus 39 days in Houston, and 223 days for families in Washington, D.C., when including transitional housing (U.S. Department of Housing and Urban Development, 2010; New York City Office of Management and Budget, 2018). These duration patterns imply that a typical family shelter stay costs between $13,000 and $43,000 in direct shelter provision alone, before accounting for administrative costs and complementary services. Beyond fiscal costs, homelessness may disrupt adults' labor market outcomes and children's development, potentially generating long-term human capital costs. The existing policy response often moves families through a series of costly interventions: from emergency shelter to programs like Rapid Rehousing (approximately 12 months of rent assistance) or Permanent Supportive Housing (long-term subsidies plus services). While these programs can successfully house families, they create a complex system where families may cycle through multiple programs, each with substantial costs, while having limited agency to address specific needs.

In this paper, we present the first large-scale causal evaluation of whether a substantial unconditional cash transfer of $9,500 can reduce homelessness among families with children in the United States and improve their overall well-being. Our hypothesis builds on models of poverty traps driven by liquidity constraints. Obtaining stable housing requires simultaneous payment of multiple fixed costs, such as security deposits, first month's rent, and moving expenses, that can total several thousand dollars. For families facing severe liquidity constraints, these lump-sum costs create a barrier to housing even when obtaining stable housing would enable them to generate sufficient income to maintain it. The $9,500 transfer amount was calibrated to cover these fixed costs while remaining less than the social cost of extended shelter stays (representing approximately 1.5 - 2.5 months of shelter provision).

We partnered with the Illinois Department of Human Services (IDHS) to implement and evaluate the Illinois Stability Investment for Family Housing (SIFH) pilot program. Between Spring 2023 and Spring 2024, we enrolled 1,127 families experiencing literal homelessness across eight Continuums of Care spanning urban, suburban, and rural areas of Illinois. Families were recruited through case manager referrals from emergency shelters, transitional housing, and street outreach programs. The research design employed family-level randomization: 612 families were randomly assigned to receive a one-time unconditional cash transfer of $9,500, while 515 families received $500. We evaluate how such a cash transfer impacts future homelessness and housing stability, as well as recipients' well-being, mental health, and labor market participation, focusing on outcomes up to one year after treatment using both administrative and survey data.

Author

• Nour Abdul-Razzak, The University of Chicago
  Presenting Author