Housing, Inequality and Public Policies

ongoing

In light of rapidly increasing prices of housing, gentrification and increasing regional inequalities within and across cities in many countries, I study the effectiveness of various public policies to counter these challenges. In particular, I will study the efficiency and distributional effects of seven different, commonly used policy instruments directly or indirectly targeted at the housing market: residential property taxes, commercial property taxes, real-estate transaction taxes, capital gains transaction taxes, local public spending, social housing programs and rent control. The overarching research question of the project is how do different public housing policies shape local housing markets and affect regional inequality. Analyzing the effects of these different instruments provides a comprehensive overview of available policy options. I analyze the policy effects combining state-of-the-art theoretical models with clean empirical evidence. The theoretical predictions about the different policy effects are based on widely used local labor market models, which I tailor and extend to the specific institutional context and specific research questions at hand. Guided by the resulting theoretical predictions, I exploit rich, micro-level data on housing markets, local labor markets, and local policy instruments in various European countries (Finland, Spain and Germany) and the United States. I selected the specific countries based on the availability of suitable data and, importantly, institutional features that allow exploiting quasi-experimental variation to identify the causal effects of the different policy instruments. I combine the empirical evidence with the theoretical insights to eventually derive the efficiency costs and redistributive effects of the respective policies. These results provide guidance for policymakers when addressing the challenges induced by the current housing crisis.