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Effectiveness and supply effects of high-coverage rent control policies

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  • Jofre-Monseny, Jordi
  • Martínez-Mazza, Rodrigo
  • Segú, Mariona

Abstract

Concerns about housing affordability are widespread in cities worldwide, prompting discussions about rent control policies. This paper studies the effects of a rent control policy adopted in Catalonia in 2020 that applied to some but not all municipalities. The policy virtually covered all the rental market and forced ads and tenancy agreements to specify the applicable rent cap to ensure enforcement. To identify the causal effect of the rent control regulation on the rental market, we exploit register microdata of tenancy agreements and implement difference-in-differences regressions and event-study designs. Our results indicate that the regulation reduced average rents paid by about 4% to 6%. We do not find evidence of a reduction in the supply of rental units, as measured by the number of signed and ended agreements or the active stock of rental units. We implement several robustness tests to address identification concerns related to Covid-19. Our results suggest that rent control policies can effectively reduce rental prices without necessarily shrinking the rental market.

Suggested Citation

  • Jofre-Monseny, Jordi & Martínez-Mazza, Rodrigo & Segú, Mariona, 2023. "Effectiveness and supply effects of high-coverage rent control policies," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:regeco:v:101:y:2023:i:c:s0166046223000510
    DOI: 10.1016/j.regsciurbeco.2023.103916
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    References listed on IDEAS

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    More about this item

    Keywords

    Rent control; Housing; Public policy evaluation; Event study;
    All these keywords.

    JEL classification:

    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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