Renter Protection and New Business Creation

Abstract

We examine whether renter protection encourages new business creation by reducing household vulnerability in home-rental markets. Passages of city-level just cause eviction ordinance in California are associated with a 9.6\% increase in the number of new small businesses, and a higher proportion of female and racial minority business owners. Local demand shocks and landlord investments are unlikely to explain the results. New firms created post passage tend to survive in the long run and perform no worse than other firms. Our evidence suggests that policies that protect renters against wrongful evictions benefit local economy by promoting self-employment and job creation.

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

JEL Classification: L26, R28, R50, J16