Robbing Peter to Pay Paul? The Redistribution of Wealth Caused by Rent Control

86 Pages Posted: 27 Mar 2022 Last revised: 6 Dec 2022

See all articles by Kenneth R. Ahern

Kenneth R. Ahern

University of Southern California - Marshall School of Business; National Bureau of Economic Research (NBER)

Marco Giacoletti

Marshall School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: May 19, 2022

Abstract

We use the price effects caused by the passage of rent control in St. Paul, Minnesota in 2021, to study the transfer of wealth across income groups. First, we find that rent control caused property values to fall sharply. A calibrated model of rent control attributes a third of these losses to indirect, negative externalities. Second, leveraging administrative parcel-level data, we find that tenants who gained more from rent control had higher incomes. Thus, to the extent that rent control is intended to benefit low-income households, the realized impact of the law was not consistent with its intention.

Keywords: Rent control, real estate valuation, wealth transfers

JEL Classification: D61, D62, G51, H23, R23, R31, R32, R38

Suggested Citation

Ahern, Kenneth Robinson and Giacoletti, Marco, Robbing Peter to Pay Paul? The Redistribution of Wealth Caused by Rent Control (May 19, 2022). Available at SSRN: https://ssrn.com/abstract=4061315 or http://dx.doi.org/10.2139/ssrn.4061315

Kenneth Robinson Ahern (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

HOME PAGE: http://www-bcf.usc.edu/~kahern/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Marco Giacoletti

Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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