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The impact of rent control: Investigations on historical data in the city of Lyon

Author

Listed:
  • Loïc Bonneval

    (CMW - Centre Max Weber - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Florence Goffette-Nagot

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Zhejin Zhao

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper reexamines the debated issue of the effects of rent control policy on the rental market. We investigate the impact on rents of three different forms of rent regulation in Lyon over a 78-­year period. We use an original historical data set which allows us to track regulation changes, rent paid, and tenant moves for a long-­run panel of flats. Using a difference-­in-­differences method, we estimate the impact of regulation on rents depending on the type of rent control over different economic periods. Our results show that the impact of rent control deepened over time. Starting with an 11% reduction in rents between 1914 and 1929, it reached a decrease by 47% in the regulated rental market in the 1949–­1968 period. We do not find any increase in rents in the unregulated segment of the rental market, which could be a result of a reduction in housing investment in the long run.

Suggested Citation

  • Loïc Bonneval & Florence Goffette-Nagot & Zhejin Zhao, 2021. "The impact of rent control: Investigations on historical data in the city of Lyon," Post-Print halshs-03465125, HAL.
    • Handle: RePEc:hal:journl:halshs-03465125
    DOI: 10.1111/grow.12584
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03465125
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    References listed on IDEAS

    as
    1. Franz Hubert, 1993. "The Impact of Rent Control on Rents in the Free Sector," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 51-61, February.
    2. Caudill, Steven B, 1993. "Estimating the Costs of Partial-Coverage Rent Controls: A Stochastic Frontier Approach," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 727-731, November.
    3. Heffley, Dennis, 1998. "Landlords, tenants and the public sector in a spatial equilibrium model of rent control," Regional Science and Urban Economics, Elsevier, vol. 28(6), pages 745-772, November.
    4. Raess, Pascal & von Ungern-Sternberg, Thomas, 2002. "A model of regulation in the rental housing market," Regional Science and Urban Economics, Elsevier, vol. 32(4), pages 475-500, July.
    5. David H. Autor & Christopher J. Palmer & Parag A. Pathak, 2014. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 661-717.
    6. Early, Dirk W., 2000. "Rent Control, Rental Housing Supply, and the Distribution of Tenant Benefits," Journal of Urban Economics, Elsevier, vol. 48(2), pages 185-204, September.
    7. Rebecca Diamond & Tim McQuade & Franklin Qian, 2019. "The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco," American Economic Review, American Economic Association, vol. 109(9), pages 3365-3394, September.
    8. Sims, David P., 2007. "Out of control: What can we learn from the end of Massachusetts rent control?," Journal of Urban Economics, Elsevier, vol. 61(1), pages 129-151, January.
    9. Joseph Gyourko & Edward L. Glaeser, 2008. "Rethinking Federal Housing Policy," Books, American Enterprise Institute, number 50499, September.
    10. Nagy, John, 1997. "Do Vacancy Decontrol Provisions Undo Rent Control?," Journal of Urban Economics, Elsevier, vol. 42(1), pages 64-78, July.
    11. Lok Sang Ho, 1992. "Rent Control: Its Rationale and Effects," Urban Studies, Urban Studies Journal Limited, vol. 29(7), pages 1183-1189, October.
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    Cited by:

    1. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research," DIW Roundup: Politik im Fokus 139, DIW Berlin, German Institute for Economic Research.
    2. Konstantin A. Kholodilin, 2022. "Rent Control Effects through the Lens of Empirical Research: An almost Complete Review of the Literature," Discussion Papers of DIW Berlin 2026, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Rent control; Housing policy; Difference-in-differences;
    All these keywords.

    JEL classification:

    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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