Economics Questions

Re: Another effect of rent control - labor market inefficiencies?

Torsten — Sun, 15 Jul 2012 14:07:05 GMT

OK, just explain according to you how the labor market inefficies do work in cases of "rent control".

Re: Another effect of rent control - labor market inefficiencies?

Wheylous — Sun, 15 Jul 2012 11:58:12 GMT

In A Critique of the Legal and Philosophical Case for Rent Control, Austrian economist Walter Block notes that rent control reduces tenant mobility^[1]. When an individual moves into an apartment and his rent becomes fixed at the present rate, he stands to have higher rates if or when he chooses to relocate. Because of this, individuals and families often stay in units for extended periods of time. This has the simultaneous effect of restricting labor markets by reducing the flow of labor into areas where demand is high.

Thanks. I'll look into it. I mean, it makes sense. The question is whether the effect can be measured.

Re: Another effect of rent control - labor market inefficiencies?

Michelangelo — Fri, 13 Jul 2012 18:49:47 GMT

So what you're saying is that a job must not only offer higher wages and benefits to encourage one to take it, but the costs associated with taking it? You're right then in saying that rent controls cause distortions in the job market by making the cost of taking a new job higher than they would be otherwise. I'd go further and include the costs of moving between countries as well though. Getting a work visa, a passport, etc etc. all takes quite a bit of cash and time. That is, if the option is even there.

Re: Another effect of rent control - labor market inefficiencies?

Smiling Dave — Fri, 13 Jul 2012 18:38:05 GMT

Have a look at the Mises Wiki on rent control. Seems to support your thesis.

Re: Another effect of rent control - labor market inefficiencies?

Wheylous — Fri, 13 Jul 2012 18:23:11 GMT

Oh come on, I had mentioned you! :P

Re: Another effect of rent control - labor market inefficiencies?

Smiling Dave — Fri, 13 Jul 2012 18:16:04 GMT

EDIT: oops, wrong thread.

BTW, though flattered that you singled me out, I'm usually not the guy to ask.

JJ and Esuric [but for certain idiosyncracies] are the ones, it seems to me.

Re: Another effect of rent control - labor market inefficiencies?

Wheylous — Fri, 13 Jul 2012 16:58:31 GMT

Bump please. Neodoxy? Smiling Dave?

Another effect of rent control - labor market inefficiencies?

Wheylous — Mon, 09 Jul 2012 12:26:05 GMT

I have not read formal texts on this, but it seems to me that one of the big barriers to clearing in the labor market and resource allocation is the inflexibility of housing accommodations. It's relatively difficult to just get up out of your house of 20 years and move to Montana in some small village just because the job there fits your qualifications.

If the ability to move around were increased, skills and demand for said skills would be reallocated faster after layoffs/breakups, etc.

In come rent controls. Not only do rent controls create shortages in the market, but it appears they might have the negative side effect of limiting people's mobility around the country to seek jobs. If housing could adjust more quickly to shifting labor, labor markets would clear more quickly and price signals as well as skills would be used more efficiently.

Thoughts? Is this something which has already been addressed?