Rent control and neighborhood income. Evidence from Vienna, Austria

Rent control is a highly controversial housing policy. For Vienna, Austria, we show how rent control impacts block-group income distributions as the share of residents with rental contracts subject to a cap increase. Using regression with spatial fixed effects, we find that a 1 %-point increase in r...

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Bibliographic Details
Published inEconomic analysis and policy Vol. 84; pp. 145 - 158
Main Authors Morawetz, Ulrich B., Klaiber, H. Allen
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.12.2024
Subjects
Housing policy
Income distribution
Rent-control
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Vienna
Vienna
Income distribution
Rent-control
Housing policy
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ISSN0313-5926
DOI10.1016/j.eap.2024.08.025

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Summary:Rent control is a highly controversial housing policy. For Vienna, Austria, we show how rent control impacts block-group income distributions as the share of residents with rental contracts subject to a cap increase. Using regression with spatial fixed effects, we find that a 1 %-point increase in residents with rental contracts subject to a cap reduces the average net income of the block-group by 52.70 Euro/year. For the typical block-group containing 861 residents, this implies a reduction in total block-group income of 45,375 Euro/year. This suggests increasing numbers of lower income residents are locating in block-groups with rental caps. We further show the effect of capped rents on average income is heterogeneous across and within block-groups, with greater reductions in higher income block-groups compared to lower income block-groups. Our results demonstrate that the rent control policy in Vienna impacts residents’ location choice and the resulting spatial income distribution despite the lack of means testing.
ISSN:0313-5926
DOI:10.1016/j.eap.2024.08.025