Effectiveness and Supply Effects of High-Coverage Rent Control Policies

22 Pages Posted: 2 Sep 2022

See all articles by Mariona Segu

Mariona Segu

University of Barcelona - Institut d'Economia de Barcelona (IEB)

Jordi Jofre‐Monseny

University of Barcelona - Institut d'Economia de Barcelona (IEB)

Rodrigo Martínez-Mazza

Uppsala University

Abstract

Concerns related to housing affordability are widespread in cities worldwide, and discussions about adopting rent control policies abound. This paper studies the effects of a rent control policy adopted in Catalonia in September 2020 that applies to some but not all municipalities. The policy virtually covers all the rental market and forces ads and tenancy agreements to specify the applicable rent cap to ensure enforcement. In order to identify the causal effect of the rent control regulation, we implement difference-in-differences regressions and event-study designs and analyze average rents and the number of tenancy agreements signed. Our results indicate that the regulation reduced average rents paid by about 6%. However, this price drop did not lead to a reduction in the supply of housing units in the rental market. We implement several robustness tests to address several identification concerns related to Covid-19. Our results suggest that rent control policies can be effective in reducing rental prices and do not necessarily shrink the rental market.

Keywords: Rent Control, Housing, Public Policy Evaluation, Event Study

JEL Classification: R52, R31, H70

Suggested Citation

Segu, Mariona and Jofre‐Monseny, Jordi and Martínez-Mazza, Rodrigo, Effectiveness and Supply Effects of High-Coverage Rent Control Policies. Available at SSRN: https://ssrn.com/abstract=4182928

Mariona Segu (Contact Author)

University of Barcelona - Institut d'Economia de Barcelona (IEB) ( email )

Jordi Jofre‐Monseny

University of Barcelona - Institut d'Economia de Barcelona (IEB) ( email )

c/ Tinent Coronel Valenzuela, 1-11
Barcelona, 08034
Spain

Rodrigo Martínez-Mazza

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

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