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The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example

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  • Céline Grislain-Letrémy
  • Corentin Trevien

Abstract

In many countries, housing subsidies to tenants are one of the main tools for housing policy but have an inflationary impact in the short term. For the first time, by taking the French example, we assess the long-term impact of housing subsidies on price, quantity, and quality in the private rental sector. We show that housing subsidies have a long-term overall upward impact on rents, even for tenants who do not benefit from subsidies. This inflationary impact is accompanied by an increase in quantity; no impact on quality is detected. These effects are heterogeneous. For small dwellings, a few years after the extension of housing subsidies, rents stopped increasing significantly and the quantity of one-room dwellings, including new buildings, increased.

Suggested Citation

  • Céline Grislain-Letrémy & Corentin Trevien, 2022. "The Long-Term Impact of Housing Subsidies on the Rental Sector: the French Example," Working papers 886, Banque de France.
    • Handle: RePEc:bfr:banfra:886
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    More about this item

    Keywords

    Public Policy Evaluation; Social Benefits; Housing Subsidies; Tax Incidence;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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