Renter Housing Stability and New Business Creation

Abstract

We examine whether stronger renter rights encourage business creation by enhancing housing stability in home-rental markets. In California, passages of city-level just cause eviction ordinance increase the number of new businesses by 9.4% and the proportion of female (7.7%) and racial-minority business owners (11.4%). New firms created post-passage can survive in the long run and have better credit quality than other firms. Household-level evidence shows that renters are more likely than homeowners to pursue self-employment after law passages. Our evidence suggests that policies that protect renters against wrongful evictions benefit the local economy by promoting self-employment and job creation.

Keywords: Home Rental, Homeownership, Eviction, Entrepreneurship, Inequality

JEL Classification: L26, R28, R50, J16