Does Increased Funding for Homeless Programs Reduce Chronic Homelessness?

This article tests whether programs that provide housing assistance to homeless people can reduce chronic homelessness. I analyze data from the Department of Housing and Urban Development for 130 communities across the United States over the period 2005 to 2007. Because the amount of federal money allocated to a community to combat homelessness may depend on unobserved characteristics of that community, I estimate a fixed‐effects model that estimates the effect of new federal homeless funding on chronic homelessness. I find that the first‐year cost of moving one chronically homeless person into permanent supportive housing is $55,600. An analysis of new funding to specific types of homeless programs indicates that programs that provide long‐term housing and services to homeless people with disabilities drives this relationship.