Working Paper Series, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin), Royal Institute of Technology
Cecilia Enström Öst, Bo Söderberg and Mats Wilhelmsson
Household allocation and spatial distribution in a market under (“soft”) rent control
Abstract: Though rent control is widely criticized in academic
analyses, it might have some positive effects, and its supporters argue
that it promotes social integration in cities. Whether this expectation is
empirically supported, however, is rarely analysed.
We analyse whether
segregation exists in the rental housing market in Stockholm, Sweden, a
market under persistent and all-embracing, yet “soft”, rent control. We use
segregation measures for the uncontrolled cooperative (multifamily) housing
segment as benchmarks for analysing whether rent control counteracts
segregation. Furthermore, we compare segregation estimates for two
categories of landlords in the rent-controlled segment, i.e., municipal
housing corporations and private property-owning corporations. Stockholm is
a mono-centric metropolitan area and our analyses are conducted within a
standard urban economic framework following Alonso. We apply the analyses
to a rich dataset encompassing some 400,000 households.
free-market segment, household income is expected to decrease with distance
from the city centre, whereas a less pronounced (or even flat) geographical
income gradient in the controlled segment would indicate a less segregated
market with respect to this variable. We find that income segregation is
significantly lower in the rent control segment than in the free market
benchmark. However, when analysing segregation with respect to ethnicity,
education level, age, and number of children, the rental housing market in
Stockholm is more segregated in these respects than is the non-regulated
market for cooperatives.
Keywords: Rent control; Segregation; Distance gradient; (follow links to similar papers)
JEL-Codes: R21; R23; R31; (follow links to similar papers)
22 pages, March 22, 2013
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