Tuesday, January 9, 2018

The effects of rent control on tenants, landlords, and inequality

Good read on the effects of rent control. There are many interesting results and Damon Jones presents a very good summary and discussion in this thread.

Diamond, R., McQuade, T., & Qian, F. (2018). The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco. NBER Working Paper No. 24181

We exploit quasi-experimental variation in assignment of rent control to study its impacts on tenants, landlords, and the overall rental market. Leveraging new data tracking individuals’ migration, we find rent control increased renters’ probabilities of staying at their addresses by nearly 20%. Landlords treated by rent control reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase. Using a dynamic, neighborhood choice model, we find rent control offered large benefits to covered tenants. Welfare losses from decreased housing supply could be mitigated if insurance against rent increases were provided as government social insurance, instead of a regulated landlord mandate.

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