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Rent Control and Tenancy Duration

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  • Jakob Roland Munch
  • Michael Svarer

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper investigates how rent control affects mobility on the Danish private rental housing market. Based on a unique and extensive data set a measure of the degree of rent regulation of each housing unit is calculated, and this is coupled with socio-economic characteristics and spells of tenancy duration for each household. To accommodate the special features of such a data set we apply a proportional hazard duration model, that encompasses both the presence of left truncated tenancy durations, right censored observations and allows for a very flexible specification of the time dependency as captured by the baseline hazard function. We find that tenancy mobility is severely reduced by the presence of rent control. Tenancy duration for a typical household in the private rental sector is found to be more than six years longer if the apartment belongs to the 10 per cent most regulated units than if it belongs to the 10 per cent least regulated units.

Suggested Citation

  • Jakob Roland Munch & Michael Svarer, "undated". "Rent Control and Tenancy Duration," Economics Working Papers 2001-7, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2001-7
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    References listed on IDEAS

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    Cited by:

    1. Meekes, Jordy & Hassink, Wolter, 2017. "The Role of the Housing Market in Workers' Resilience to Job Displacement after Firm Bankruptcy," IZA Discussion Papers 10894, Institute for the Study of Labor (IZA).
    2. Svarer, Michael & Rosholm, Michael & Munch, Jakob Roland, 2005. "Rent control and unemployment duration," Journal of Public Economics, Elsevier, pages 2165-2181.
    3. Juan S. Mora-Sanguinetti, 2011. "The Regulation of Residential Tenancy Markets in Post-War Western Europe: An Economic Analysis," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 47-75, June.
    4. Hilber, Christian A.L. & Lyytikäinen, Teemu, 2017. "Transfer taxes and household mobility: Distortion on the housing or labor market?," Journal of Urban Economics, Elsevier, vol. 101(C), pages 57-73.
    5. Konstantin A. Kholodilin & Julien Licheron, 2017. "Macroeconomic Effects of Rental Housing Regulations: The Case of Germany in 1950-2015," Discussion Papers of DIW Berlin 1649, DIW Berlin, German Institute for Economic Research.
    6. Bloze, Gintautas & Skak, Morten, 2016. "Housing equity, residential mobility and commuting," Journal of Urban Economics, Elsevier, vol. 96(C), pages 156-165.
    7. Simmons-Mosley, Tammie X. & Malpezzi, Stephen, 2006. "Household mobility in New York City's regulated rental housing market," Journal of Housing Economics, Elsevier, vol. 15(1), pages 38-62, March.
    8. Deininger, Klaus & Jin, Songqing & Nagarajan, Hari K., 2008. "Efficiency and equity impacts of rural land rental restrictions: Evidence from India," European Economic Review, Elsevier, vol. 52(5), pages 892-918, July.
    9. Jin, Songqing & Deininger, Klaus W. & Nagarajan, Hari K., 2006. "Equity and efficiency impacts of rural land rental restrictions: Evidence from India," 2006 Annual meeting, July 23-26, Long Beach, CA 21305, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Arnott, Richard & Shevyakhova, Elizaveta, 2014. "Tenancy rent control and credible commitment in maintenance," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 72-85.
    11. Munch, Jakob Roland & Rosholm, Michael & Svarer, Michael, 2008. "Home ownership, job duration, and wages," Journal of Urban Economics, Elsevier, vol. 63(1), pages 130-145, January.
    12. Ralph Bradburd & Stephen Sheppard & Joseph Bergeron & Eric Engler, 2006. "The Impact Of Rent Controls In Non-Walrasian Markets: An Agent-Based Modeling Approach," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 455-491.
    13. Mora, Juan S., 2008. "The institutions of house tenancy markets in post-war Western Europe : an economic analysis," IFCS - Working Papers in Economic History.WH wp08-11, Universidad Carlos III de Madrid. Instituto Figuerola.
    14. Micheli, Martin & Schmidt, Torsten, 2015. "Welfare effects of rent control — A comparison of redistributive policies," Economic Modelling, Elsevier, vol. 48(C), pages 237-247.
    15. Ismir Mulalic & Holger Rasmussen & Jan Rouwendal & Hans Henrik Woltmann, 2017. "The Financial Crisis and Diverging House Prices: Evidence from the Copenhagen Metropolitan Area," Tinbergen Institute Discussion Papers 17-084/VIII, Tinbergen Institute.
    16. Ballesteros, Marife M. & Magtibay, Jasmine E. & Ramos, Tatum P., 2016. "Rent Control in the Philippines: An Update," Discussion Papers DP 2016-40, Philippine Institute for Development Studies.
    17. Seko, Miki & Sumita, Kazuto, 2007. "Effects of government policies on residential mobility in Japan: Income tax deduction system and the Rental Act," Journal of Housing Economics, Elsevier, vol. 16(2), pages 167-188, June.
    18. Shereen Attia, 2016. "Rent Control Dilemma Comeback in Egypt’s Governance: A Hedonic Approach," Working Papers 979, Economic Research Forum, revised Feb 2016.
    19. Krol, Robert & Svorny, Shirley, 2005. "The effect of rent control on commute times," Journal of Urban Economics, Elsevier, vol. 58(3), pages 421-436, November.
    20. Mark A. C. Kattenberg & Wolter H. J. Hassink, 2017. "Who Moves Out of Social Housing? The Effect of Rent Control on Housing Tenure Choice," De Economist, Springer, vol. 165(1), pages 43-66, March.

    More about this item

    Keywords

    Rent control; mobility; duration model.;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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