Must Agreements Be Kept? Residential Leases During Covid-19

Itai Ater, Yael Elster, David Genesove and Eran B Hoffmann

The Economic Journal, 2023, vol. 133, issue 649, 477-492

Abstract: We study residential lease payments during the COVID-19 pandemic. A survey of Israeli renters shows that nearly one in eight did not pay full rent during the first lockdown in March–April 2020. These households held back two-thirds of their contractually due rent on average. Financially fragile households with large income cuts withheld a greater share. Both formal and relational aspects of the landlord-tenant relationship affected payments: tenants paid more of their rent if their leases included formal provisions against non-payment, and less if they had strong relationships with their landlords. We use bargaining and relational contract theories to explain our findings.

Date: 2023
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