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Implicit Rents from Own-Housing and Income Distribution: Econometric Estimates for Greater Buenos Aires

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  • Leonardo Gasparini

    ()
    (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) FCE - UNLP)

  • Walter Sosa Escudero

    ()

Abstract

Most income studies do not take into account the implicit rent obtained by households who inhabit their own dwellings, a fact that introduces a potentially relevant bias in inequality, poverty, and welfare measures. In this paper we estimate these implicit rents for the Greater Buenos Aires area from information of Argentina’s National Household Expenditures Survey (ENGH) of 1996/7. Based on a sample of households that rent their dwellings, quantile regressions are used to estimate observed rents from a hedonic model. Estimated coefficients are applied to households that do not rent their houses or apartments in order to predict the implicit rent derived from living in an owned house. Estimated implicit rents are added to the standard notion of household income and various inequality measures are reestimated. We find that the consideration of these implicit rents reduces inequality due to an income elasticity of spending in housing less than one, and to the relatively large proportion of house owners in the lower strata of the income distribution.

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Bibliographic Info

Paper provided by CEDLAS, Universidad Nacional de La Plata in its series CEDLAS, Working Papers with number 0014.

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Length: 30 pages
Date of creation: Oct 2004
Date of revision:
Publication status: Published in Journal of Income Distribution 12 (1-2): 32-55.
Handle: RePEc:dls:wpaper:0014

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Keywords: implicit rent; hedonic prices; quantile regression; housing; income distribution.;

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  1. Yates, Judith, 1994. "Imputed Rent and Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(1), pages 43-66, March.
  2. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  3. Katz, Arnold J, 1983. "Valuing the Services of Consumer Durables," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(4), pages 405-27, December.
  4. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521608275, April.
  5. Stephen Sheppard, 1998. "Hedonic Analysis of Housing Markets," Urban/Regional 9805001, EconWPA.
  6. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
  7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  8. Craig, Steven G & Kohlhase, Janet E & Papell, David H, 1991. "Chaos Theory and Microeconomics: An Application to Model Specification and Hedonic Estimation," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 208-15, May.
  9. Eugenio Figueroa & George Lever, 1992. "Determinantes del Precio de Mercado de los Terrenos en el Área Urbana de Santiago," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 29(86), pages 99-114.
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  1. repec:hal:wpaper:halshs-00588318 is not listed on IDEAS
  2. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional effects of imputed rents in five European countries," Journal of Housing Economics, Elsevier, vol. 19(3), pages 167-179, September.
  3. Francesco Figari & Alari Paulus & Holly Sutherland & Panos Tsakloglou & Gerlinde Verbist & Francesca Zantomio, 2012. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," DEOS Working Papers 1209, Athens University of Economics and Business.
  4. Ricardo Bebczuk, 2009. "SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence," CEDLAS, Working Papers 0080, CEDLAS, Universidad Nacional de La Plata.
  5. Christos Koutsampelas & Panos Tsakloglou, 2013. "The distribution of full income in Greece," International Journal of Social Economics, Emerald Group Publishing, vol. 40(4), pages 311-330, April.
  6. Christos Koutsampelas & Panos Tsakloglou, 2012. "The distribution of full income in Greece," University of Cyprus Working Papers in Economics 03-2012, University of Cyprus Department of Economics.
  7. Roberto Cortes Conde, 2008. "Spanish America Colonial Patterns: The Rio de La Plata," Working Papers 96, Universidad de San Andres, Departamento de Economia, revised Mar 2008.

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