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The effect of second generation rent controls on the quality of rental housing

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  • David L. Mengle

Abstract

Microeconomic theory predicts that rent controls will lead to greater housing quality deterioration than would have been the case in an uncontrolled market. However, empirical analyses of rent control have concentrated on income distribution effects. This study tests the hypothesis of quality deterioration using a two period linked sample of dwelling units drawn from eight Standard Metropolitan Statistical Areas, half of which have rent control laws. The results indicate that quality was 7.1% lower in controlled markets in 1974, and 13.5% lower in 1977. Slow, cumulative effects of deferred maintenance may be responsible for the more pronounced 1977 results.

Suggested Citation

  • David L. Mengle, 1985. "The effect of second generation rent controls on the quality of rental housing," Working Paper 85-05, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:85-05
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    References listed on IDEAS

    as
    1. Pena, Daniel & Ruiz-Castillo, Javier, 1984. "Distributional aspects of public rental housing and rent control policies in Spain," Journal of Urban Economics, Elsevier, vol. 15(3), pages 350-370, May.
    2. Quigley, John M., 1982. "Nonlinear budget constraints and consumer demand: An application to public programs for residential housing," Journal of Urban Economics, Elsevier, vol. 12(2), pages 177-201, September.
    3. Fisher, Franklin M, 1970. "Tests of Equality Between Sets of Coefficients in Two Linear Regressions: An Expository Note," Econometrica, Econometric Society, vol. 38(2), pages 361-366, March.
    4. Olsen, Edgar O, 1972. "An Econometric Analysis of Rent Control," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1081-1100, Nov.-Dec..
    5. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
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    Cited by:

    1. Ballesteros, Marife M. & Magtibay, Jasmine E. & Ramos, Tatum, 2016. "Rent Control in the Philippines: An Update," Discussion Papers DP 2016-40, Philippine Institute for Development Studies.

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    Keywords

    Housing; Subsidies; Rent control;
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