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LICENSING AND THE INFORMAL SECTOR IN RENTAL HOUSING MARKETS: THEORY AND EVIDENCE
Author(s) -
Samuel Andrew,
Schwartz Jeremy,
Tan Kerry
Publication year - 2021
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12501
Subject(s) - economic rent , renting , rental housing , quality (philosophy) , business , economics , labour economics , microeconomics , political science , law , philosophy , epistemology
Although the goal of licensing is to ensure the quality of services, it can also induce firms to operate informally or exit altogether. This paper examines licensing in the rental housing market by developing a model that indicates licensing's impact on the size of the underground rental market, the number of vacancies, and homelessness are ambiguous. As a result, we calibrate the model using a unique dataset from Baltimore, which allows us to directly observe underground rentals and vacancies. Our calibrations show that licensing may have a modest impact on rents, while increasing quality more substantially. ( JEL L15, K42, D78, E26, O17)