Misallocation and rent control

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Journal Title
Journal ISSN
Volume Title
School of Business | Master's thesis
Date
2024
Major/Subject
Mcode
Degree programme
Economics
Language
en
Pages
56+1
Series
Abstract
This master’s thesis examines the effects of rent control on the allocation of rental housing. In a perfectly efficient allocation, dwellings would be allotted to the households with the highest willingness to pay for the specific dwelling. Rent control may distort this by, on one hand, causing households with a lower will-ingness to pay to demand dwellings valued higher by others, and on the other hand, requiring matching to be dictated by extra-market mechanisms likely less efficient than price-based bargaining. An empirical analysis of tenants moving from rent controlled housing to unregulated housing, based on Finnish registry data finds that on average individuals consume more floor area and live further away from municipal centers under rent control. The effects appear stronger for smaller households. However, strong untestable identifying assumptions are required, and while the effects persist across different specifications, no strict causal conclusion can be drawn. (JEL R20, R38, D12, D61)
Description
Thesis advisor
Saarimaa, Tuukka
Keywords
vuokra-asunnot, vuokrasääntely, asuntojen kohdentuminen, vuokra-asuntomarkkinat
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Citation