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

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Author Info
Leonardo Gasparini () (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
Walter Sosa Escudero ()

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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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Publisher Info
Paper provided by CEDLAS, Universidad Nacional de La Plata in its series 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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Related research
Keywords: implicit rent hedonic prices quantile regression housing income distribution.

Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Katz, Arnold J, 1983. "Valuing the Services of Consumer Durables," Review of Income and Wealth, Blackwell Publishing, vol. 29(4), pages 405-27, December.
  2. 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.. [Downloadable!] (restricted)
  3. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
  6. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall. [Downloadable!] (restricted)
  7. Yates, Judith, 1994. "Imputed Rent and Income Distribution," Review of Income and Wealth, Blackwell Publishing, vol. 40(1), pages 43-66, March.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Facundo Alvaredo, 2007. "The Rich in Argentina over the twentieth century: From the Conservative Republic to the Peronist experience and beyond 1932-2004," PSE Working Papers 2007-02, PSE (Ecole normale supérieure). [Downloadable!]
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