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Estimating household demand for housing attributes in rent-controlled markets

  • Van Ommeren, Jos
  • Graaf-de Zijl, Marloes

We estimate the household’s marginal willingness to pay for housing attributes in the rent-controlled sector, so where rents are not freely market determined. The application of hedonic price approaches to obtain estimates of the household’s value of housing characteristics is then invalid. We apply an alternative estimation approach based on residential mobility. In our application, we focus on the households’ willingness to pay for number of rooms as well as the willingness to pay to avoid a long commuting distance. Our estimates appear plausible. For example, for households in the rent-controlled sector are willing to pay about 7% of their household income for an additional room. The implied marginal costs of commuting are about €0.17–€0.23 per (one-way) kilometre.

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Article provided by Elsevier in its journal Journal of Housing Economics.

Volume (Year): 22 (2013)
Issue (Month): 1 ()
Pages: 11-19

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Handle: RePEc:eee:jhouse:v:22:y:2013:i:1:p:11-19
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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  1. Sheppard, Stephen, 1999. "Hedonic analysis of housing markets," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 41, pages 1595-1635 Elsevier.
  2. van Ommeren, Jos & Fosgerau, Mogens, 2008. "Workers' marginal costs of commuting," MPRA Paper 12010, University Library of Munich, Germany.
  3. Van Ommeren, Jos & Koopman, Marnix, 2011. "Public housing and the value of apartment quality to households," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 207-213, May.
  4. Timothy J. Bartik & J.S. Butler & Jin Tan Liu, 1990. "Maximum Score Estimates of the Determinants of Residential Mobility: Implications for the Value of Residential Attachment and Neighborhood Amenities," Upjohn Working Papers and Journal Articles 90-01, W.E. Upjohn Institute for Employment Research.
  5. Stephen Gibbons & Alan Manning, 2003. "The incidence of UK housing benefit: evidence from the 1990s reforms," LSE Research Online Documents on Economics 20011, London School of Economics and Political Science, LSE Library.
  6. Koning, Ruud H. & Ridder, Geert, 1997. "Rent assistance and housing demand," Journal of Public Economics, Elsevier, vol. 66(1), pages 1-31, October.
  7. Alan Manning, 2003. "The real thin theory: monopsony in modern labour markets," LSE Research Online Documents on Economics 20050, London School of Economics and Political Science, LSE Library.
  8. van Ommeren, Jos & Wentink, Derk & Dekkers, Jasper, 2011. "The real price of parking policy," Journal of Urban Economics, Elsevier, vol. 70(1), pages 25-31, July.
  9. Edward L. Glaeser & Erzo F. P. Luttmer, 1997. "The Misallocation of Housing Under Rent Control," NBER Working Papers 6220, National Bureau of Economic Research, Inc.
  10. Steve Gibbons & Alan Manning, 2003. "The Incidence of UK Housing Benefit: Evidence from the 1990s Reforms," CEP Discussion Papers dp0597, Centre for Economic Performance, LSE.
  11. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
  12. Ommeren, Jos van & Berg, Gerard J. van den & Gorter, Cees, 1998. "Estimating the marginal willingness to pay for commuting," Serie Research Memoranda 0046, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  13. Timothy J. Gronberg & W. Robert Reed, 1994. "Estimating Workers' Marginal Willingness to Pay for Job Attributes Using Duration Data," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 911-931.
  14. Harald Dale-Olsen, 2006. "Estimating Workers' Marginal Willingness to Pay for Safety using Linked Employer-Employee Data," Economica, London School of Economics and Political Science, vol. 73(289), pages 99-127, 02.
  15. Larsen, Morten Marott & Pilegaard, Ninette & Ommeren, Jos Van, 2008. "Congestion and residential moving behaviour," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 378-387, July.
  16. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
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