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The Effect of Rent Control on Housing Quality Change: A Longitudinal Analysis
Abstract
It is widely believed that rent control leads to a decline in the quality of rental housing. This study examines the effect of rent control on the quality of rental housing in New York City. Quality change is linked to the suppression of rent below market levels and other characteristics of the housing unit. The authors develop a first-order nonstationary, heterogeneous Markov model that allows for true state dependence, observed heterogeneity, nonparametric unobserved heterogeneity, and a mover-stayer structure. The results offer some support for the belief that rent control leads to a deterioration in housing quality but suggest the need for additional investigation of this issue. Copyright 1993 by University of Chicago Press.
... A significant number of studies have evaluated the impact of rent regulation (primarily the first-generation rent control) on housing-related outcomes such as housing prices and rents (Early, 2000;Sims, 2007;Autor et al., 2014), housing supply (Malpezzi and Ball, 1993;Diamond et al., 2019) and misallocation (Glaeser, 1996;Glaeser and Luttmer, 2003;Micheli and Schmidt, 2015;Favilukis et al., 2019), housing quality (Olsen, 1988;Gyourko and Linneman, 1990;Moon and Stotsky, 1993), and gentrification and displacement (Nagy, 1995;Munch and Svarer, 2002;Asquith, 2019;Diamond et al., 2019); for excellent reviews, see Arnott (1995); Turner and Malpezzi (2003); Metcalf (2018); Pastor et al. (2018). More recently, the scope of studies on rent regulation has expanded to broader outcomes beyond to report. ...
... In this period, data show a growth of private market rents of 7% in the mean and 8.2% in the median. Moon and Stotsky, 1993). If price is proportional to quality, a landlord may be fully compensated for the wedge between the equilibrium price and regulated price by sufficiently reducing housing quality. ...
... Other issues, such as tenant turnover, have been analyzed in later waves. For example, Linneman (1987); Moon and Stotsky (1993); Nagy (1995, 1997) use 1978-1987and Sieg and Yoon (2020 uses the 2011 NYCHVS. We exclude the 2014 from our analysis because the variable that captures the year the tenant moved into the unit is not coded consistently with the other waves. ...
... A considerable number of studies have evaluated the impact of rent regulation, primarily focusing on rent control. 8 These studies have explored impacts on housing-related outcomes such as housing prices and rents (Early, 2000;Sims, 2007;Autor, Palmer, and Pathak, 2014;Breidenbach, Eilers, and Fries, 2022;Ahern and Giacoletti, 2022), housing supply (Malpezzi and Ball, 1993;Diamond, McQuade, and Qian, 2019), misallocation (Glaeser, 1996;Glaeser and Luttmer, 2003;Micheli and Schmidt, 2015;Favilukis, Mabille, and Van Nieuwerburgh, 2019;Chapelle, Wasmer, and Bono, 2019), land value (Mense, Michelsen, and Kholodilin, 2019), housing quality (Olsen, 1988;Gyourko and Linneman, 1990;Moon and Stotsky, 1993), and mobility, gentrification, and displacement (Nagy, 1995;Munch and Svarer, 2002;Asquith, 2019;Diamond, McQuade, and Qian, 2019). 9 More recently, the scope of studies on rent regulation has expanded to outcomes beyond housing, such as crime Pathak, 2017, 2019). ...
... When the permitted growth rate is lower than the counterfactual rent growth the unit would experience if it were unregulated, rent stabilization results in an actual discount. 15 When the regulated price is below the market equilibrium price, landlords may decide to recover some of the foregone income by, for example, refraining from performing maintenance (Diamond, McQuade, and Qian, 2019;Moon and Stotsky, 1993), which can reduce unit 13 Appendix Table A1 compares various aspects of rent stabilization and HPRC. 14 The rent growth caps for rent-stabilized units since 1979 can be found in Table A3. ...
... 20 Previous literature used the NYCHVS starting from the 1968 wave(Olsen, 1972;Linneman, 1989, 1990;Ault, Jackson, and Saba, 1994) to study first-generation HPRC regulation. Later waves were used to analyze other issues, such as tenant turnover(Linneman, 1987;Moon and Stotsky, 1993;Nagy, 1995 Nagy, , 1997. In this paper, we exploit the information regarding tenants' labor market outcomes, which was first added in the 1991 wave. ...
We study the effect of rent stabilization in NYC on tenant unemployment from 2002 to 2017. We show rent stabilization increases tenants’ unemployment by six percentage points, more than double the average unemployment rate during the study period. Moreover, the effect is concentrated in traditionally privileged groups. We address the potential policy’s endogeneity with an instrumental variable that captures neighborhood-level rent-stabilized units’ relative vacancy when the tenant moves in. We develop a job-search model with rent stabilization that rationalizes the disincentive mechanism behind this effect. We confirm empirically heterogeneous effects across groups of workers in the directions suggested by the model.
... Economists has been studying this issue as well (see Jenkins 2009, for example), generally concluding that "a ceiling on rents reduces the quality and quantity of housing" (Alston et al. 1992). In Moon and Stotsky (1993), a longitudinal study of some housing is conducted in New York that supports the hypothesis of a decrease in housing quality. Kutty (1996) suggested the impact is less clear, but that "the level of reinvestment under rent control is lower than the level of reinvestment in the absence of rent control." ...
... This resulted in the isolation of a significant relationship between rent control status and higher damage rates in all three measures of damage. Our analysis suggest that external and utility damage rates do tend to be decreasing over time (whereas Moon and Stotsky (1993) suggested they were increasing at the time of their study), but rent control appears to be having a negative impact on housing quality; which is consistent with much of the literature. ...
It is the concern of policymakers every year in New York City to consider whether or not the enacted rent control policy has a positive effect on the rental market. In order to measure the efficacy of the rent control policy, we aim to study the change in housing quality of people who live in rent controlled homes compared to those in non-rent controlled homes. A housing quality index metric was created in order to study how housing quality changes over time and its relationship to rent control. The impact of rent control on housing quality is analyzed, thus assessing one measure of policy effectiveness. The analysis indicates that rent controlled homes are associated with higher damage rates than non-rent controlled homes, perhaps indicating that the inverse of the intended effect is occurring.
... 19 Directive 2012/27/EU." This statement is aligned with the conclusions of some authors suggesting that rent controls that prevent landlords from updating the rent at the end of the contract, even after renovation works, may worsen housing conditions (Moon and Stotsky, 1993), thus perpetuating the tenant-owner dilemma. ...
... As commented, rent controls and similar measures are an element contributing to the tenant-owner dilemma. Therefore, even if the intention behind such measures is to elevate energy efficiency in rented housing (e.g. through rent caps for lessefficient homes), they might paradoxically lead to the opposite outcome (Moon and Stotsky, 1993). In cases where landlords lack adequate funding programs or legislation fails to provide mechanisms for retrofitting (e.g. ...
Purpose -
The Recast Energy Efficiency Directive 2023 has defined the concept of “split incentive,” also known as “tenant-owner dilemma.” This dilemma refers to the situation where neither landlords nor tenants have incentives to invest in energy efficiency upgrades. Although the Energy Efficiency Directive calls Member States to overcome legal barriers to remove split incentives and to encourage retrofits, the list of possible measures is too vague. This paper aims to discuss tenancy law measures designed to increase the energy efficiency of residential housing and to detect which Member States have already addressed this phenomenon.
Design/methodology/approach -
This paper analyses, from a civil legal perspective, the possible private law barriers arising from the tenant-owner dilemma when performing energy efficiency works in selected countries and proposes legal reforms in tenancy law and related policies to overcome them. To do so, this paper follows a legal-dogmatic and comparative law methodology.
Findings -
This paper concludes that some tenancy law provisions, such as the possibility to increase the rent after energy efficiency renovations and long-term leases, may challenge the tenant-owner dilemma in private rented markets, thus promoting renovations and retrofitting for energy efficiency purposes. It also proposes other policies intended to increase parties’ willingness to undertake works.
Research limitations/implications -
More research on the economic and legal efficiency to regulate some of the civil law measures to challenge the tenant-owner dilemma should be necessary.
Practical implications -
The civil law measures included in this paper may help national policymakers meet the energy efficiency targets, according to what is established in the Recast Energy Efficiency Directive 2023.
Originality/value -
Based on the economic theory of the tenant-owner dilemma, this paper investigates the elements of tenancy law that may contribute to less energy-efficient homes, proposing policies for those countries interested in addressing the energy-efficiency challenge from a private law point of view.
... Second, we improve the comparability of observed housing quality between unregulated and rent-stabilized 1 Alston et al. (1992) document a consensus in the economics profession in the 1990s that rent control reduces the quantity and quality of rental housing. Since then, large volumes of economic research have shown, for example, rent regulation lowers the quantity and/or quality of rental housing units (Olsen, 1988;Gyourko and Linneman, 1990; Moon and Stotsky, 1993;Sims, 2007;Diamond et al., 2019;Breidenbach et al., 2022); property value (Autor et al., 2014;Ahern and Giacoletti, 2022); housing misallocation (Glaeser, 1996;Glaeser and Luttmer, 2003;Favilukis et al., 2023;Chapelle et al., 2019). There is also a small but growing literature that studies the effects of rent regulation beyond the housing market, which is discussed in detail in Jiang et al. (2022). ...
... Most related papers focus on average discounts instead of predicting unit-level discounts (Marks, 1984;Autor et al., 2014). Moon and Stotsky (1993) also estimate discounts but use both regulated and unregulated units in a single Tobit regression, where market rents are modeled as a censored variable. 7 ...
Despite a rekindled public interest in rent stabilization amidst the housing affordability crisis, evidence of the magnitude and distribution of the benefits offered by this policy is scarce. Measuring the policy's benefits is challenging because the counterfactual unregulated rents of rent-stabilized housing units are not observed. This paper measures the benefits of rent stabilization for tenants in New York City (NYC) from 2002 to 2017 using hedonic pricing to predict rent discounts for all rent-stabilized units. The paper also investigates racial inequality in rent discounts. We validate the model's out-of-sample prediction power using a machine learning method, improve quality comparability between unregulated and stabilized units using propensity scores, and control for unobservable housing quality using a repeat-rent approach based on a panel of de-regulated units. We find an average rent discount of 4 and 150, 43 less than that for White stabilized tenants. Location, tenancy duration, and policy awareness contribute to these racial gaps in rent discounts.
... Their rational choice is therefore to decrease their inputs. However, Moon and Stotsky (1993) show that tenants have more incentives to invest in maintenance of their dwelling in order to compensate more or less under rent controls. Could the regulation significantly decrease rents? ...
... For example, the tenant can ask the landlord to repair if water and heat fail, but not for cracked paint. Moon and Stotsky (1993) argue that landlords input less into maintenance under rent control. But tenants in fixed long-term duration have more incentives to engage in self-maintenance in order to compensate more or less. ...
This thesis contains three empirical essays on housing markets and housing policies. In the first essay, we investigate the effects of rent control on rents using historical panel data in Lyon over a 78-year period. We use multiple regressions with fixed effects as the main form of analysis. Our results show that the causal effect of rent control on rents in Lyon is significantly negative. In the second essay, I study how age influences housing demand based on household level data from China. The two-stage hedonic house price model used in this essay allows me to estimate the pure age effect on housing demand, after housing quality and other household’s characteristics are controlled for. The results demonstrate that the willingness-to-pay for a constant-quality house will decrease slightly or keep constant when a representative household head becomes old, if the household head’s educational attainment is controlled for. In contrast, it will drop rapidly if the household head’s educational attainment is not controlled for. Therefore, this essay concludes that the total housing demand will not decrease with population aging, because the current middle- aged generation get educated more than the current old generation. Finally, in the third essay, in the framework of Rosen-Roback model, I analyze how housing costs affect the ratio of high-skilled to low-skilled workers, explicitly the skill intensity ratio (SIR), across cities in China. To avoid endogeneity issues, I use both share of unavailable land and historical housing prices as instruments of current housing prices. The results show that average housing prices have significant positive effects on the SIR in 2010 when workers’ mobility is relaxed, but insignificant effects on the SIR in 2000 when workers’ mobility was tightly regulated.
... Among the scant studies analyzing the second-generation rent stabilization policy that restricts rent growth, 9 Another segment of the rent control literature also investigates the broader implications of such policies, specifically focusing on aspects of the housing market including pricing, rents, land valuation, and housing supply, with key studies referenced (Early, 2000;Sims, 2007;Autor, Palmer, and Pathak, 2014;Breidenbach, Eilers, and Fries, 2022;Ahern and Giacoletti, 2022;Mense, Michelsen, and Kholodilin, 2019;Malpezzi and Ball, 1993;Diamond, McQuade, and Qian, 2019). Moreover, the research extends to issues like housing market misallocation and housing quality (Glaeser, 1996;Glaeser and Luttmer, 2003;Micheli and Schmidt, 2015;Favilukis, Mabille, and Van Nieuwerburgh, 2019;Chapelle, Wasmer, and Bono, 2019;Olsen, 1988;Gyourko and Linneman, 1990;Moon and Stotsky, 1993), as well as broader effects on crime, mobility, gentrification, residential displacement Pathak, 2017, 2019;Nagy, 1995;Munch and Svarer, 2002;Asquith, 2019;Diamond, McQuade, and Qian, 2019), and labor market outcomes (Svarer, Rosholm, and Munch, 2005;Jiang, Quintero, and Yang, 2022). the main focus is on either low-income versus high-income tenants or the racial disparities (Pollakowski, 2003;Chen, Jiang, and Quintero, 2023). ...
This study examines how immigrants, often concentrated in urban areas and burdened by higher rents, benefit from rent control. We focus on New York City's rent stabilization policy, using high-quality microdata from 2002 to 2017. We find that immigrant tenants face greater rent affordability challenges and are more likely to live in rent-stabilized units than non-immigrant tenants. However, conditional on living in rent-stabilized housing units, immigrants receive $151 less in monthly rent discounts than their non-immigrant counterparts. This notable immigrant-native gap is economically and statistically significant and robust to various checks. In addition, this gap is particularly pronounced among female-headed tenants, highlighting an additional layer of gender disparity. Factors like spatial sorting, tenancy duration, policy awareness, and property characteristics primarily contribute to this disparity.
... Comenzando por los efectos sobre el mantenimiento, Moon y Stotsky (1993), para los controles de primera generación en la ciudad de Nueva York entre 1970 y 1980, encuentran que la regulación puede dar lugar a una disminución en la calidad de las viviendas controladas, o como mínimo que reduce la probabilidad de mejoras en la calidad. Por su parte, Gyourko y Linneman (1990), con datos de 1968 (y así con unos controles con vigencia de más de 20 años) y Sims (2007) encuentran una relación negativa entre su existencia y los niveles de mantenimiento (si bien el resultado de los primeros está sujeto a ciertas unidades de vivienda y a ciertas localizaciones). ...
In this paper we review the allocative and distributional effects of those provisions that fall under the general heading of rent controls. We discuss “first generation” controls (viewed as setting a maximum rental price) and “second generation” controls (where the regulation is not as stringent and, in particular, exceptions associated with new housing units are allowed) as well as the so-called “third generation” or tenancy controls (where rental payments are regulated within a tenancy but may vary between tenancies). We also review the indications provided by the empirical evidence along with some recent regulation and deregulation experiences.
... Some experts argue for rent control to deal with these challenges [e.g., 14], but this may be prohibited by the state (Bohnenkamp et al., 2011). Other experts contend that rent control is inadvisable because it may reduce the supply and quality of affordable housing (Moon & Stotsky, 1993). Incentives for developers to provide affordable housing through density bonuses or other government financing can help increase supply (Been et al., 2019;Ryser et al., 2014;Meeks, 1989). ...
Unconventional oil and gas development (UOGD) has become the most widespread form of energy production in the United States. The booms and busts associated with UOGD are not unique to the industry, but the impacts to local communities are. As the industry continues to dominate the nation's energy landscape, and marginalized communities are disproportionately exposed to the extraction processes, it is important to understand the full scope of the environmental and social impacts experienced by communities during booms and busts. We review the literature on both the ecological and social boom-bust impacts of UOGD, noting the dearth of research on bust-time impacts. We conclude by calling for greater research on the long-term impacts of busts, in particular, and on understudied aspects of social impacts like those to public services, infrastructure, and social capital.
... Glaeser and Luttmer (2003) estimate that almost 20% of housing in New York City is occupied by households that would reside elsewhere in an unregulated market because of rent control. As landlords cannot increase rents to market levels, they have very little incentive in undertaking repairs and maintenance, leading to deterioration of rent-controlled properties ( Wheaton, 1981;Moon and Stotsky, 1993;Sims, 2007;Tandel et al., 2016 ). ...
One housing paradox in many markets is the simultaneous presence of high costs and high vacancy rates. India has expensive housing relative to incomes and an urban housing vacancy rate of 12.4%. We show how insecure property rights in India, as a result of rent control and weak contract enforcement, increases vacancy rates. Using a two-way linear fixed effects panel regression, we exploit changes in rent control laws in the states of West Bengal, Karnataka, Gujarat, and Maharashtra to find that pro-tenant laws are positively related to vacancy rates. A pro-landlord policy change liberalizing rent adjustments could potentially reduce vacancy rates by 2.8 to 3.1 percentage points. Contract enforcement measured by density of judges is negatively related to vacancy. We estimate that a policy change in rent control laws would have a net welfare benefit and could reduce India’s housing shortage by 7.5%.
... The motivation to do maintenance on the building is high due to the income the tenant received as the effects of rent control. However, the limitation would be maintaining the entire building such as common areas and support services (Moon & Stotsky, 1993). ...
... Some experts argue for rent control to deal with these challenges [e.g., 14], but this may be prohibited by the state (Bohnenkamp et al., 2011). Other experts contend that rent control is inadvisable because it may reduce the supply and quality of affordable housing (Moon & Stotsky, 1993). Incentives for developers to provide affordable housing through density bonuses or other government financing can help increase supply (Been et al., 2019;Ryser et al., 2014;Meeks, 1989). ...
Scholarship on boom-busts cycles in resource extraction often assumes that affected resource-rich communities are at best reactive, at worst helpless, in the face of the large, exogenous shocks this cycle visits upon them. Researchers infrequently examine what communities themselves can do to improve their economic prospects and residents' quality of life amidst booms and busts. In this review paper, we identify and synthesize work scattered across disparate academic and gray literature—in planning, law, community economic development, rural sociology, economics, and political science, among others—to holistically assess what we know about how communities can use local policymaking to manage impacts of booms and busts associated with unconventional oil and gas drilling (UOGD), often called “fracking.” We highlight examples of communities tackling this task using vertical and horizontal governance strategies and distill expert recommendations for how communities can build boom-bust resiliency generally and in key areas impacted by UOGD. © 2022 The Authors. Review of Policy Research published by Wiley Periodicals LLC on behalf of Policy Studies Organization.
... The motivation to do maintenance on the building is high due to the income the tenant received as the effects of rent control. However, the limitation would be maintaining the entire building such as common areas and support services (Moon & Stotsky, 1993). ...
A culture of good governance in the public sector necessitates transparency and honesty.
However, the evolution of governance practices has shifted due to fast-paced changes such as globalization, technical advancement, and political landscapes. Moreover, abuse of power, corruption and reckless management can lead to “ineffective governance” in a nation. Good governance practices are needed to ensure that authorities effectively implement all policies for a better nation. It is necessary to deliver an approach that encourages well-defined governing practice; thus, organizational ambidexterity is one of the few approaches that can be suggested to achieve good governance practices. Integration between exploration and exploitation in organizational ambidexterity will support the public sector to be innovative and efficient while dealing with the demand for changes to improve governance quality. Hence, this review paper offered a brief overview to explore the relationship between organizational ambidexterity and the effectiveness of good governance practices, which could sustain precise acts of management and achieves the public service’s objectives and strategies.
... Rent control does however come at a significant cost. The long list of potential inefficiencies associated with setting rents at below market levels include decreasing tenant mobility (Diamond et al. 2019;Munch and Svarer, 2002;Gyourko and Linneman, 1989); limiting housing supply through decreased incentives to construct new apartments (Diamond et al. 2019;Glaeser and Luttmer, 2003;Lindbeck, 1967); a misallocation of apartments (Van Ommeren and Van der Vlist, 2016;Bulow and Klemperer, 2012;Glaeser and Luttmer, 2003); decreased incentives to maintain rental properties (Lind, 2015;Moon and Stotsky, 1993;Werczberger, 1988); tenure conversions when landlords sell to owner-occupants (Diamond et al. 2019, Kopsch, 2019, Donner and Kopsch, 2018Werczberger, 1988) and the occurrence of black markets (Malpezzi, 1998;Werczberger, 1988). Even in the presence of a myriad of negative consequences, rent control is used as a policy measure combating increasing urban rents. ...
... Hence, the policy recommendation for the governments of middle-income Latin American countries would be to not rely on rent controls and too strong tenure security, since when they are strong, they generate various negative byproducts, while, when they are weak, they hardly slow down rent increases. Cross-sectional regression Large and significant positive indirect effect of decontrol on the valuation of properties that were exposed to controlled units Moon and Stotsky (1993) New York, 1978York, -1987 Micro, housing units ...
Following World War I, rent control became a standard policy response to the housing shortage and the resulting rent increases. Typically, economists blame it for creating inefficiencies in the housing market and beyond. We investigate whether rental market regulations (including rent control, protection of tenants from eviction, and housing rationing) had any effects in a middle-income Latin American economy, such as Argentina. To answer this question, we take advantage of a wide range of housing market indicators and restrictive rental regulation indices covering almost one century. Using a standard OLS model and MARS, a nonlinear estimation technique, we find that rental market regulations have exerted a statistically significant negative impact on the growth rates of the real housing rents. However, they were only effective for short periods following both World Wars, when regulations were novel and particularly strong.
... Rent regulation is not a bad policy but becomes an issue when such policies are not periodically reviewed to become progressive to the changing dynamics in the market. As has been established, rent control policies that are non-progressive tend to lead to massive declines in the quality of housing (Moon & Stotsky, 1993). On the flip side, removing rent control laws comes with advantages of relieving prospective renters from unnecessary searching costs and making the search for new accommodation easy (Oust, 2018). ...
Housing practitioners and policy experts are advocating for an expansion in rental housing supply in contemporary cities around the world. The objective is to convince institutional investors to include rental housing investment in their investment portfolio to contribute to boosting housing supply. Unfortunately, the rental sector is characterized by numerous uncertainties and challenges, making it unattractive to institutional investors. With the growing attention to institutional investors in various housing market contexts, an understanding of the market risks (also known as barriers), is useful to inform future research and policymaking. Using a systematic literature review methodology, this paper synthesizes the extant literature on the market risks inhibiting institutional investment in rental housing. Findings reveal the following barriers: low profitability, non-progressive rent control policies, unclear target group for rented projects, poor landlord-tenant relations, inadequate property management and unreliable property market information. Among all the barriers identified, low profitability and inadequate property management had great influence on their investment decision. Firstly, institutional investors perceive rental housing investment as less profitable and unattractive in terms of project performance. Secondly, the lack of supporting structures for the property management sector contributes to derailing rental yields. The review also finds that the target group for rental projects are often vague especially for projects under government assistance. The rental sectors in many countries are confronted with numerous problems, some of which greatly inhibit institutional investors from investing in the rental asset. This paper concludes that, although the idea of expanding rental housing supply seems laudable, ignoring these problems may be detrimental to housing markets in the long run. Rental markets in many countries are volatile, and thus not ready to receive institutional investors fully into the sector. An expanded rental sector could be advanced if policy makers take the appropriate steps to resolve the identified challenges. Adequate structural preparations must also be made for large scale rental housing supply.
... There are a number of papers that attempt to quantify the costs of rent control on housing quality (Moon and Stotsky, 1993;Gyourko and Linneman, 1990;Sims, 2007, for example), generally showing that rent controlled units are maintained at a lower quality than they would be in the absence of price controls. Other research shows how rent control negatively affects housing prices for the controlled (Autor et al., 2014) and uncontrolled stock (Fallis and Smith, 1984;Early, 2000). ...
This dissertation combines research from multiple areas of applied economics and is mostly focused on estimating the long-term impacts of housing and criminal justice policy. In addition, this dissertation covers an important methodological tool that is increasingly necessary for empirical researchers when linking multiple data sets to estimate causal treatment effects. In the first chapter, I study the effects of rent control on the long-term outcomes of children. Rent control is a common policy enacted to limit the growth of rents and allow tenants to remain in their homes for longer. Prior empirical research has mainly focused on rent control's impact on neighborhoods and housing markets while ignoring the potential long-term impacts of rent control for the people directly affected by the policy, particularly children. Using nearest neighbor matching at the census tract level, I estimate the effects of rent control on average long-term outcomes for children, measured at the childhood census tract level. I find weakly suggestive evidence that rent control can improve the long-term labor market outcomes for children while also creating negative spillovers for children who do not directly benefit from the policy. In the second chapter, coauthored with Michael Mueller-Smith, we develop a record linkage algorithm that is trained using a large, novel data set that includes fingerprint identifiers. Record linkage is a crucial empirical tool for contemporary applied researchers who are interested in linking data sets that do not contain unique identifiers. We show that this large training data substantially improves model performance compared to the smaller training samples frequently reported in the literature. We also show evidence that training data based on human coding can be overly conservative when identifying matches on a target sample with different characteristics than the human coder. This research has major implications for empirical researchers who wish to link data sets and estimate heterogeneous treatment effects on subpopulations. In the last chapter, coauthored with Keith Finlay, Elizabeth Luh, and Michael Mueller-Smith, we study the long-term impacts of criminal financial sanctions on labor market outcomes and criminal recidivism. The rising use of financial sanctions in the criminal justice system in the United States necessitates a rigorous test of their impacts on criminal defendants and their families. We use data that has been processed and linked together using the record linkage algorithm detailed in my second chapter and utilize the implementation of a 2003 Michigan law that sharply increased fines associated with certain driving crimes. After carefully accounting for how the long-run behavioral effects of the policy could undermine the integrity of the research design, we find null to slightly positive effects of the policy on labor outcomes, minimal deterrent effects, and suggestive evidence of a financial burden on romantic partners.
... Higher commute times Bettendorf and Buyst (1997) Belgium, 1920-1939 on the valuation of properties that were exposed to controlled units Moon and Stotsky (1993) New York, 1978-1987 Tobit and panel data model ...
Private rental markets have become increasingly important since the Global Financial Crisis 2008–2009 and rent controls are back on the political agenda. Yet, they have received less attention from housing scholars than homeownership and public housing. This paper presents new data on the development of private tenancy legislation based on a content-coding of rent control, protection of tenants from eviction, and rental housing rationing laws across more than 15 countries and 100 years. This long-run perspective allows for inquiring about the dynamic effects of rent control on the rise of homeownership as the dominant tenure during the twentieth century. We find that both rent regulation and rationing measures were followed by increases of homeownership and decreases of private rentals. We suggest that homeownership was not just produced by generous subsidies or the homeownership dream, but also through the push-effect of regulation crowding out rental units.
... In general, most research has examined differences in housing stock condition between different locations, or different time periods (Moon & Stotsky, 1993), rather than between tenures, and where tenure is looked at, the surveys may exclude those with the worst condition of housing due to the need for consent. An ecological-level study is a simple way to overcome such difficulties. ...
Background:
Previous research has shown two-way associations between rental tenure, poorer housing quality, and health outcomes, but little research has looked at relative housing contributions to health outcomes.
Aims:
We investigated whether tenure and/or dwelling condition were associated with housing-sensitive hospitalizations and whether any association differed by income.
Method:
Using a data set of housing characteristics matched to hospitalization records, rental tenure data, and income quintiles, we modeled differences in housing-sensitive hospitalization rates by ecological-level tenure and housing condition, controlling for age-group and mean temperatures.
Results:
There were clear associations between income, tenure, and house condition, and winter-associated hospitalization risk. In the adjusted model, the largest risk differences were associated with neighborhoods with low income (risk ratio [RR] = 1.48) and high rental tenure (RR = 1.41). There was a nonsignificant difference for housing condition (RR = 1.04).
Discussion:
Rental tenure and poor housing condition were risks for housing-sensitive hospitalization, but the association with income was stronger. Higher income households may be better able to offset quality and tenure-related health risks. This research illustrates the inverse housing law: Those most vulnerable, with most need for good-quality housing, are least likely to have it. Income inequity is inbuilt in tenure, quality, and health burden relationships.
Conclusion:
These findings suggest that measures to address health inequities should include improvements to both tenure security and housing quality, particularly in low-income areas. However, policymakers aiming to reduce overall hospitalization rates should focus their efforts on reducing fuel poverty and improving the affordability of quality housing.
... However, as Olsen (1988) points out, tenant maintenance may offset some reduction in landlord maintenance, lessening this effect. Using panel data from New York City from 1978 to 1987, Moon and Stotsky (1993) estimate the conditional probability that a sound unit becomes substandard. They find that the probability of a unit deteriorating in quality increases with the size of the implied subsidy from rent control. ...
Rent controls, designed to lower the cost of housing for renters, may have the perverse effect of increasing rents for tenants in the unregulated sector. Although new construction is exempt from current rent control laws, a reduction in supply of rental housing will occur if investors are wary of future controls affecting their units. Also, if controls reduce landlord maintenance, total housing supply in a market will fall. Using 1984 to 1996 data from the American Housing Survey, this study examines the role of rent controls in determining the variations in prices of uncontrolled rental housing across metropolitan areas.
The results suggest a positive and statistically significant relationship between the introduction of rent control and price in the uncontrolled sector. However, the link between controls and prices declines through time and may completely disappear after 20 to 30 years with no new construction subject to controls.
... For earlier studies, seeEarly (2000);Glaeser and Luttmer (2003);Gyourko and Linneman (1989);Moon and Stotsky (1993);Sims (2007);Olsen (1972). ...
... Our analysis, however, focuses not on the effects of redevelopment per se, but rather on regulatory issues that allow for an extended period in which owners have the incentive to redevelop yet are prevented from executing it, resulting in a deliberate asset deterioration. 8 Finally, the means by which housing policies may promote physical deterioration has been explored-both empirically and theoretically-in the rent control literature (see, among others, Albon and Stafford 1990;Olsen 1988;Moon and Stotsky 1993;Rydell and Neels 1982). Redevelopment, however, typically associates with a priori (pre-redevelopment) low-quality housing conditions and low socio-economic neighborhoods. ...
The elapsed time between a government’s announcement of its intention to redevelop and the launch of the new construction may often be quite lengthy. This study uses a game-theoretic framework to examine the effect of the option to redevelop on the quality of the existing housing stock during this extended pre-redevelopment period. We show that the benefits that accompany future redevelopment may lead to accelerated deterioration in the pre-redevelopment period. Moreover, we identify circumstances under which there exists a unique perfect Nash equilibrium where, in order to discourage objections by other homeowners, those who support redevelopment intentionally promote structural deterioration during the pre-redevelopment period. Our results highlight the need to shorten the period of time between the announcement of the option to redevelop and its implementation.
... Expense Another way to pass on the revenue loss is to adjust (lower) quality. For example, landlords will allow property to go into disrepair when faced with rent controls (Moon and Stotsky 1993). Perhaps banking service quality declined in response to the law. ...
The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 alters the competitive structure of the debit card payment processing industry and caps debit card interchange fees for banks with over 10 billion threshold.
... In a recent working paper, Diamond et al. (2017) finds that tenancy rent control reduces household mobility, the size of the rental housing stock, and leads to city-wide increases of rents. Results from Sims (2007) and Autor et al. (2014) point in the direction that there is only a small effect of rent control on construction activity, but a shift of dwellings from rental to owner-occupied status and a deterioration in the quality of existing rental units (Sims, 2007), while the impact controls cause immediate reductions to the market value of rental housing (Early and Phelps, 1999;Fallis and Smith, 1985;Marks, 1984), depress refurbishment, reduce maintenance (Kutty, 1996;Andersen, 1998;Olsen, 1988b;Moon and Stotsky, 1993), slow construction activity (McFarlane, 2003;Glaeser and Luttmer, 2003), and induce inefficient allocation of units (Glaeser and Luttmer, 2003;Arnott and Igarashi, 2000), while-in the short run-having ambiguous effects on rents (Nagy, 1997;Early, 2000;Fallis and Smith, 1984;Smith, 1988). Furthermore, the targeted groups only partially benefit (Linneman, 1987;Ault and Saba, 1990;Glaeser, 2003). ...
Second generation rent control seeks to prevent negative quantity effects by exempting newly built units. The artificially lowered rent in the controlled segment makes renting attractive for households that would otherwise not have rented in the market, replacing households with higher willingness to pay for housing. These households bid up prices in the free market segment, giving rise to an opposite-sign spillover from the controlled to the free market (Mense, Michelsen, and Kholodilin 2017). This paper documents a positive effect of “second generation” rent control on the value of vacant, buildable land.
... Affordability of homes is modified by housing tenure, including home ownership and the private or public rental sectors, which are largely driven by socio-economic status and ability to secure an affordable home. Other potential measures such as rent control to improve accessibility may have unintended consequences, reducing the available supply and worsening housing conditions [83]. ...
Housing conditions have been an enduring focus for public health activity throughout the modern public health era. However, the nature of the housing and health challenge has changed in response to an evolution in the understanding of the diverse factors influencing public health. Today, the traditional public health emphasis on the type and quality of housing merges with other wider determinants of health. These include the neighbourhood, community, and “place” where a house is located, but also the policies which make access to a healthy house possible and affordable for everyone. Encouragingly, these approaches to policy and action on housing have the potential to contribute to the “triple win” of health and well-being, equity, and environmental sustainability. However, more effective housing policies (and in public health in general) that adopt more systemic approaches to addressing the complex interactions between health, housing, and wider environment are needed. This paper illustrates some of the key components of the housing and health challenge in developed countries, and presents a conceptual model to co-ordinate activities that can deliver the “triple win.” This is achieved by offering a perspective on how to navigate more effectively, inclusively and across sectors when identifying sustainable housing interventions.
... Another way to pass on the revenue loss is to adjust (lower) quality. Such a response by treated banks could be akin to the behavior of landlords regarding the upkeep of their properties when faced with rent controls (Moon and Stotsky, 1993). In our application, lower expenditures on salaries, bank facilities (premises), other noninterest expenses, and total noninterest expenses would all be consistent with banks cutting back on costs (and likely quality) in response to the reduced revenue per transaction from the regulation. ...
Retail banking is a complex industry in which depository institutions bundle various services and may have market power. We use a recent regulation as a natural experiment to provide broad evidence about competition and the importance of bundling in retail banking. That regulation, which resulted from the Durbin Amendment to the Dodd-Frank Act, capped debit card interchange fees for banks with over 10 billion threshold.
... Rent control, for instance, is suggested to distort the residential construction and lower the housing quality. The target (an affordable residential district) would be achieved but only with costs that are not being sufficiently compensated (Moon and Stotsky 1993). Interestingly, the Regulation clearly takes into account the necessity to compare benefits and costs before conducting any interventions: Article 20(1)(b) permits competent authorities to act only when the "measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits". ...
This paper discusses the renewed short selling regulation (Regulation (EU) No 236/2012) in the European Union. The focus is on the provisions that deal with prohibiting short selling in exceptional market circumstances. The Regulation further enforces certain obligations to report and disclose short positions. It is concluded that banning short selling is not an effective tool to contain extreme price volatility. The difference-in-differences regression and repeated measures GLM were used to test whether short selling bans were successful in containing volatility of those Spanish and Italian stocks that were subject to two back-to-back prohibitions during the years 2011-2013. The results are consistent with the majority of previous research, suggesting that the effectiveness of short sale constraints in reducing volatility is limited at best. Furthermore, there are evidence of counterproductive effects: constraints on short selling may actually increase volatility as well as deteriorate liquidity. However, based on theory and previous studies, reporting and disclosure requirements shall be favored provided they improve market efficiency as well as supervisory work of regulatory bodies.
Rent control measures are typically in place to assist low-income households and decrease segregation. Yet, there is little empirical research on the social impact of such policies and specifically the role of how rent-controlled apartments are allocated. This study analyzes the income-distributional effects of rent control with a novel dataset that includes characteristics of those who received rent-controlled apartments between 2011 and 2016 in central Stockholm, Sweden. Specifically, this paper provides analysis of the impact of allocating apartments through a centrally managed queue with apartments from both public and private landlords. To quantify the rent subsidy, we estimate hypothetical market rents by taking the owner-occupied market as a point of deviation. We find a positive relationship between the rent subsidy and time in que. Apartments in the fourth quartile of subsidy require on average 21 years in que, while those in the first quartile require 10 years on average. There is considerably heterogeneity in the level of rent subsidy, and tenant income. Even as allocating through queuing should benefit high-income households less than allocation based on landlord preferences, we find several regressive effects. Controlling for time in queue, we find that tenants in the fourth quartile of annual income receive monthly rent subsidies that are substantially higher than renters in the first quartile of income. Similarly, rental apartments in the fourth quartile of the subsidy have older tenants with substantially higher incomes compared to less subsidized apartments. The regressive effect is driven by high earners renting larger apartments with larger absolute subsidies and being able to wait longer in queue.
More than 30 years after its premiere, Seinfeld continues its run as a seminally popular television show. On October 1, 2021, five‐year streaming rights to the show were purchased by Netflix for $500 million. Set in New York City, where rent control laws have a long history, several episodes of the show consider the trials of apartment living, including shortages, tastes for discrimination by sellers, bribery, search costs, and quality degradation. Seinfeld also illustrates the informal process through which rent‐controlled apartments are advertised (e.g., less advertising under rent control shortage). This paper argues that popular media can be used as an effective pedagogical tool in learning. This paper analyzes four episodes of Seinfeld to help students identify and differentiate the very real costs of rent control. The paper also guides students to appreciate the difficulty in crafting a policy that is free of unintended consequences.
Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits quasi-exogenous variation in the affordability of rents due to a cut in rent subsidies for low income households in the United Kingdom in April 2011. Using comprehensive district-level administrative data, we show that the affordability shock caused a significant increase in: financial distress, evictions, property crimes, insecure temporary housing arrangements, statutory homelessness, and actual rough sleeping. The most notable rise in statutory homelessness is driven by families with children, lone parents, individuals with existing health conditions, and as a result of having been evicted. We estimate that the fiscal savings were low and shifted towards the local administration: savings by the central government were partially offset by increase in council spending to meet statutory obligations for homelessness.
The growing housing affordability crisis is at the center of conversations about U.S. inequality. This paper reconsiders the role of rent stabilization as one important affordability tool. We investigate who is most likely to benefit from rent stabilization, how much non-stabilized renters would save if their units were stabilized, and the extent to which stabilization would reduce rent burden among households. Using New York City Housing Vacancy Survey data and employing logistic and hedonic regression techniques, we show that Hispanic and foreign-born householders are more likely to live in rent-stabilized units and find evidence of both rent savings and rent burden reduction when comparing stabilized tenants with their non-stabilized counterparts. We argue that expanded rent stabilization could be paired with policies that stimulate new construction to simultaneously curb rent inflation, protect current populations from displacement, and increase housing supply.
This paper presents causal evidence of a significant positive effect of rent control status on eviction filing rates in San Francisco, CA. Two publicly available data sets, of eviction notices (n = 21,806) and property tax records (n = 1,978,687), are combined using a regression discontinuity design to estimate a local average treatment effect of ∼1.3% of evictions per residential unit per year conditioned on positive rent control status. Compared to the baseline rate of eviction notices over this same time period, the findings suggest that for a given tenant, positive rent control status (i.e., living in a rent-controlled unit) increases the likelihood of eviction by approximately 240% per year. This finding is best understood not as an inherent characteristic of rent control policy in general, but rather as the result of specific state-wide laws, passed in the years following the adoption of rent control in San Francisco, which granted rent-controlled property owners an economic incentive to evict and the legal means to do so.
El proyecto de Ley de vivienda 2022. 1. Cómo llegamos a 2022. 2. Qué se espera de una Ley de vivienda en este contexto. 3. Algunos grandes temas del Proyecto de Ley. 3.1. Su constitucionalidad. 3.2. Su objeto: condiciones básicas, cumplimiento deberes constitucionales relacionados con la vivienda y “función social de la vivienda”. 3.3. La “administrativización” del derecho de propiedad sobre la vivienda. 3.4. Los conceptos. 3.5. Las medidas excepcionales para viviendas en zonas tensionadas. Medidas sobre las viviendas vacías. 3.6. La falta de conexión con los grandes retos de España 2050 (Capítulo 6o). 4. Conclusiones.
ABSTRACT
Since the nation joined the European Union, the process that regulates housing policy in Portugal has been subject to specificities that are proper of the Portuguese situation. In a State which has a considerable housing deficit, it was the quantifier elements that judged the various governments regarding this matter. Almost all of the housing production depended on mortgage loans in which soft loans played an important part, together with tax benefits. The negative effects produced by lease blocking were increasingly felt throughout the analyzed period of time. The changes in context due to the decrease of tax rates and the legislative alterations on soft loans, conditioned the agents behavior and, necessarily, the rhythm of Portugal’s housing market. Using the STATIS (Structuration of Tableaux A Trois Indices de la Statistique) methodology and through the analysis of the housing policy instruments, it was possible to identify the trajectories and changes in performance of the State, Owners and Families during the period between 1992 and 2008, as well as the most significant variables for understanding the problematic of housing in Portugal.
Keywords: Housing, Policy Instruments, STATIS.
Online short-term rental (STR) platforms such as Airbnb have grown spectacularly. We study the effects of regulation of these platforms on the housing market using a quasi-experimental research design. 18 out of 88 cities in Los Angeles County have severely restricted short-term rentals by adopting Home Sharing Ordinances. We apply a panel regression-discontinuity design around the cities’ borders. Ordinances reduced listings by 50% and housing prices by 2%. Additional difference-in-differences estimates show that ordinances reduced rents also by 2%. These estimates imply large effects of Airbnb on property values in areas attractive to tourists (e.g. an increase of 15% within 2.5km of Hollywood’s Walk of Fame).
En août 2015, la ville de Paris a renforcé son dispositif d’encadrement des loyers. Les nouveaux loyers ne devaient pas dépasser un certain plafond, défini comme le loyer au mètre carré médian par catégorie (nombre de pièces, grand quartier et époque de construction) majoré de 20 %. Cet article analyse l’impact de ce nouveau dispositif. On montre que l’encadrement n’a été que partiellement respecté : 20 % des loyers se situent au-dessus des plafonds après août 2015. On démontre ensuite que le dispositif d’encadrement est distorsif. Le calcul des plafonds est distinct par nombre de pièces mais ne tient pas compte du fait que des logements disposant du même nombre de pièces peuvent avoir des surfaces très différentes. Ainsi, les logements à petite surface par pièce (ou logements à petites pièces) sont plus contraints par les plafonds. En conséquence, seuls les loyers de ces logements diminuent après la mise en place de l’encadrement.
Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law. (JEL R23, R31, R38)
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