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Rent Control and the Housing Expenditure Share

Author

Listed:
  • João Miguel Ejarque

    (DREAM, Amaliegade 44, 1256 København K)

  • Joachim Borg Kristensen

    (jbkr@nykredit.dk)

Abstract

Using Danish register data we observe that households living in rental housing subject to rent regulations pay lower rents and have a lower expenditure share than households living in unregulated housing. We set up a model with rent control on a fraction of the housing stock, an explicit treatment of housing quality, and preferences including minimum housing and allowing for a non-constant share of housing in expenditure. The model broadly ?ts the data, and we ?nd evidence of signi?cant complementarity between housing and non durable consumption. Furthermore, the policy implications of our model are surprising in that a complete liberalization of the market achieves a modest welfare gain of under 1%.

Suggested Citation

  • João Miguel Ejarque & Joachim Borg Kristensen, 2013. "Rent Control and the Housing Expenditure Share," CAM Working Papers 2013-01, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  • Handle: RePEc:kud:kuieca:2013_01
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    File URL: http://www.econ.ku.dk/cam/wp0910/2013-01.pdf/
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    References listed on IDEAS

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    1. Jonas D. M. Fisher & Martin Gervais, 2007. "First-time home buyers and residential investment volatility," Working Paper Series WP-07-15, Federal Reserve Bank of Chicago.
    2. Morten Skak & Gintautas Bloze, 2013. "Rent Control and Misallocation," Urban Studies, Urban Studies Journal Limited, vol. 50(10), pages 1988-2005, August.
    3. Blair Jenkins, 2009. "Rent Control: Do Economists Agree?," Econ Journal Watch, Econ Journal Watch, vol. 6(1), pages 73-112, January.
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    Cited by:

    1. Micheli, Martin & Schmidt, Torsten, 2015. "Welfare effects of rent control — A comparison of redistributive policies," Economic Modelling, Elsevier, vol. 48(C), pages 237-247.

    More about this item

    Keywords

    Rent Control; Expenditure Shares; Preferences;

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