LICENSING AND THE INFORMAL SECTOR IN RENTAL HOUSING MARKETS: THEORY AND EVIDENCE. (23rd September 2020)

• Record Type: Journal Article
• Authors: Samuel, Andrew; Schwartz, Jeremy; Tan, Kerry
• Is Part Of: Contemporary economic policy. Volume 39:Number 2(2021)
• Page Start: 325
• Page End: 347
• Publication Date: 2020-09-23
• Subjects: Economic policy -- Periodicals; United States -- Economic policy -- 1993-2001 -- Periodicals; United States -- Economic policy -- 2001- -- Periodicals; 338.9005
• DOI: 10.1111/coep.12501
• Languages: English
• ISSNs: 1074-3529

Abstract

Abstract : 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)