Efficiency rents: A new theory of the natural vacancy rate for rental housing

Thomas J. Miceli and C.F. Sirmans

Journal of Housing Economics, 2013, vol. 22, issue 1, 20-24

Abstract: This paper adapts the theory of efficiency wages to explain the natural vacancy rate in rental housing markets. A positive vacancy rate provides landlords an incentive to invest in maintenance because if they fail to do so, some tenants will leave and the unit will sit vacant for a finite period of time. The resulting foregone rent will penalize landlords’ failure to maintain. Habitability laws, which have been enacted by states since the 1960s, provide a non-market penalty which lessens the need for market enforcement. Variation in these laws by state offers an opportunity to test the theory.

Keywords: Efficiency rents; Natural vacancy rate; Rental housing (search for similar items in EconPapers)
JEL-codes: K11 R31 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:22:y:2013:i:1:p:20-24

DOI: 10.1016/j.jhe.2013.01.002

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