The Distribution of Rental Assistance Between Tenants and Landlords:The Case of Students in Central Jerusalem

Students living in rental apartments in central Jerusalem were provided grants in 2006–11, in order to encourage urban renewal. This led to a marked increase in the number of students in the area. This study examined the distribution of the benefit between the tenants and the landlords. It relied predominantly on rental advertisements as well as actual rents from 2000–2012, and on administrative data of the rent paid by grant recipients. The research method was based on hedonic estimations of the rent using a difference-in-differences method—the rent in the center of the city during the grants period compared with the periods before and after, vis-à-vis that difference in similar neighborhoods (including adjacent to the city center) during those periods. The research indicates—subject to the assumption that actual rents and prices quoted in rental notices moved together—that in the periods around the start of the grant program and around its cancellation, the share of the grants reaching the recipients’ landlords ranged from one-fifth to two-fifths. The grants led to an increase in rents in the center of the city for nonrecipients as well, so that the overall additional rent is equivalent to four-fifths of the grant amounts. These rates are within the broad range of findings worldwide.