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Rent Control and the Housing Expenditure Share

João Miguel Ejarque and Joachim Borg Kristensen
Additional contact information
João Miguel Ejarque: DREAM, Amaliegade 44, 1256 København K
Joachim Borg Kristensen: jbkr@nykredit.dk

No 2013-01, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics

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%.

Keywords: Rent Control; Expenditure Shares; Preferences (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2013-05-18
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