Rent Control, Market Segmentation, and Misallocation: Causal Evidence from a Large-Scale Policy Intervention

Andreas Mense, Claus Michelsen and Konstantin A. Kholodilin

Journal of Urban Economics, 2023, vol. 134, issue C

Abstract: This paper studies market segmentation that arises from the introduction of rent control. When a part of the market remains unregulated, theory predicts an increase of free-market rents due to the misallocation of households to dwellings. To document this mechanism empirically, we study a large-scale policy intervention in the German housing market. We isolate the misallocation mechanism by exploiting temporal variation in treatment dates in an event study design. We find a robust positive spillover effect of rent control on free-market rents. Moreover, mobility of renters living in rent-controlled units decreased. [91 words]

JEL-codes: D4 R21 R31 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (11)

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Working Paper: Rent Control, Market Segmentation, and Misallocation: Causal Evidence from a Large-Scale Policy Intervention (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:134:y:2023:i:c:s0094119022000894

DOI: 10.1016/j.jue.2022.103513

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