Short Literature Review:Joseph Gyourko and Peter Linneman Equity and Efficiency Aspects of Rent Control An Empirical Study of New York City

Equity and Efficiency Aspects of Rent Control An Empirical Study of New York City and Politics beings by suggesting that rent controls have both efficiency and distributional consequences. With the use of a mathematical formula Gyourko and Linneman illustrate “that the benefits associated with occupying a rent controlled units is quite large (Gyourko and Linneman 1987, 61).” However, the findings also points out rent regulation benefits White Americans more than it does African Americans. African Americans  made up 14.4% of the research sample and occupied just over 19% of all the controlled units (Gyourko and Linneman 1987, 61). Gyourko and Linneman suggest that this means that the benefit-to-income ratio was higher for White Americans families than it was for African Americans or Puerto Rican families. Additionally, Gyourko and Linneman’s research shows that rent controls were “slightly progressive but exhibited very little equity due to extremely poor benefit targeting (Gyourko and Linneman 1987, 64).” This is important because it shows that rent control benefits are adversely distributed with respect to race and promoted a small degree of economic equity.

Moreover, Gyourko and Linneman point out that while many poor families received benefits from rent regulation, so did many high-income families. According to Gyourko and Linneman this suggests that while low-income families benefited from rent controls, many poor families in the city received no benefit. This is important because it indicates that the primary social benefit of rent regulation is its distributional impact. 

Furthermore, Gyourko and Linneman’s research indicates that African Americans and Puerto Ricans in the controlled sector received lower benefits than White Americans However, both groups were well represent in the control sector relative to their shock in the over all renter population. This is significant because it show that rent controls facilitate small amounts of racial diversity. In addition, Gyourko and Linneman point out the effect of rent controls on the prices of housing. The study concluded that tenancy duration raised rents in the uncontrolled sector by almost $200 and led to a drop of $50 in the control sector. This is suspect to be attributed to the fact that units with long tenancy duration have levels of unmeasured housing quality and hence higher rents (Gyourko and Linneman 19877, 69).

Rent Control, Rent Stabilization and its Adverse Affects on Housing in New York City would follow the groundwork set by this research to further examine the role of race in New York City’s controlled housing sector.