Article on Economics

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The article selected for this synthesis and response is on the subject of "rent control and tenancy duration". In this article the authors conduct research on the relationship between rent control and tenancy duration. The research is carried out in the Danish housing market. The authors use a proportional hazard duration model that uses both left truncated tenancy duration's, right censored observations and allows for flexible specification of time dependency of the hazard rate.
The Danish housing market has seen rent control since 1939. According to economists, rent control has a detrimental effect on the quality and quantity of housing. Rent control makes the housing market inefficient. There is poor maintenance of houses, miss-allocation of houses and poor mobility in the housing market. Those that favor rent control feel that removal of rent control would lead to higher welfare for those who have higher incomes.There is evidence that mild rent control can lead to better welfare for the people. Studies show that there is an impact of rent control on tenancy mobility. One study points out that there is a positive association between the level of benefits from rent control and tenancy duration. Another finds that households living in controlled housing are less mobile and 80% of the difference in mobility is attributed to rent control. Other studies also confirm that tenants in controlled housing are less mobile than their uncontrolled counterparts.
The present study includes the full period of tenancy so that the entire period is reflected in the results. The authors use a modified likelihood function to incorporate left truncated observations. They allow for a more flexible specification of the baseline hazard function.
The Danish private rental housing market has been selected because the characteristics of rent control in that market fits with the description of rental housing markets of several other countries. The characteristics of the Danish housing market are that there are four main sectors. These are owner occupied housing, cooperative housing, public rental housing, and private rental housing. In the Danish market rent control has been in force in the private rental market for more than 60 years. In properties built before 1991, the landlords are not allowed to raise rents due to increased demand for housing. In minor rural areas rent is determined by legislation and when a private rented property is for sale, ...