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Rent control and neighborhood income. Evidence from Vienna, Austria

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  • Morawetz, Ulrich B.
  • Klaiber, H. Allen

Abstract

Rent control is a highly controversial housing policy. For Vienna, Austria, we show how rent control impacts block-group income distributions as the share of residents with rental contracts subject to a cap increase. Using regression with spatial fixed effects, we find that a 1 %-point increase in residents with rental contracts subject to a cap reduces the average net income of the block-group by 52.70 Euro/year. For the typical block-group containing 861 residents, this implies a reduction in total block-group income of 45,375 Euro/year. This suggests increasing numbers of lower income residents are locating in block-groups with rental caps. We further show the effect of capped rents on average income is heterogeneous across and within block-groups, with greater reductions in higher income block-groups compared to lower income block-groups. Our results demonstrate that the rent control policy in Vienna impacts residents’ location choice and the resulting spatial income distribution despite the lack of means testing.

Suggested Citation

  • Morawetz, Ulrich B. & Klaiber, H. Allen, 2024. "Rent control and neighborhood income. Evidence from Vienna, Austria," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 145-158.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:145-158
    DOI: 10.1016/j.eap.2024.08.025
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