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Implicit Rents from Own-Housing and Income Distribution. Econometric Estimates for Greater Buenos Aires

Author

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  • Walter Sosa Escudero

    () (Department of Economics, Universidad de San Andres)

  • Leonardo Gasparini

    (Universidad Nacional de La Plata)

Abstract

Most income studies do not take into account the implicit rent obtained by households who inhabit their own dwellings, a fact that introduces a potentially relevant bias in inequality, poverty, and welfare measures. In this paper we estimate these implicit rents for the Greater Buenos Aires area from Argentina's National Household Expenditures Survey (ENGH) of 1996-1997. Based on a sample of households that rent their dwellings, quantile regressions are used to estimate observed rents from a hedonic model. Estimated coefficients are applied to households that do not rent their houses or apartments in order to predict the implicit rents derived from living in an owned house. Estimated implicit rents are added to the notion of household income and various inequality measures are re-estimated. We find that the consideration of these implicit rents reduces inequality due to an income elasticity in spending in housing less than one, and to the relatively large proportion of house owners in the lower strata of income distribution.
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Suggested Citation

  • Walter Sosa Escudero & Leonardo Gasparini, 2003. "Implicit Rents from Own-Housing and Income Distribution. Econometric Estimates for Greater Buenos Aires," Working Papers 58, Universidad de San Andres, Departamento de Economia, revised May 2004.
  • Handle: RePEc:sad:wpaper:58
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    References listed on IDEAS

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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. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, April.
    3. Eugenio Figueroa & George Lever, 1992. "Determinantes del Precio de Mercado de los Terrenos en el Área Urbana de Santiago," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 29(86), pages 99-114.
    4. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-675, November.
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    6. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    7. Yates, Judith, 1994. "Imputed Rent and Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(1), pages 43-66, March.
    8. Katz, Arnold J, 1983. "Valuing the Services of Consumer Durables," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(4), pages 405-427, December.
    9. Craig, Steven G & Kohlhase, Janet E & Papell, David H, 1991. "Chaos Theory and Microeconomics: An Application to Model Specification and Hedonic Estimation," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 208-215, May.
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    Cited by:

    1. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 167-179.
    2. Christos Koutsampelas & Panos Tsakloglou, 2013. "The distribution of full income in Greece," International Journal of Social Economics, Emerald Group Publishing, vol. 40(4), pages 311-330, March.
    3. Facundo Alvaredo, 2007. "The Rich in Argentina over the twentieth century: From the Conservative Republic to the Peronist experience and beyond 1932-2004," Working Papers halshs-00588318, HAL.
    4. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute for the Study of Labor (IZA).
    5. Roberto Cortes Conde, 2008. "Spanish America Colonial Patterns: The Rio de La Plata," Working Papers 96, Universidad de San Andres, Departamento de Economia, revised Mar 2008.
    6. Ricardo Bebczuk, 2009. "SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence," CEDLAS, Working Papers 0080, CEDLAS, Universidad Nacional de La Plata.

    More about this item

    Keywords

    rent; income distribution; Buenos Aires;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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