Efficiency rents : A new theory of the natural vacancy rate for rental housing
Miceli, Thomas J.
Efficiency rents : A new theory of the natural vacancy rate for rental housing - Journal of Housing Economics, 2013. - 5 pages
KEYWORDS: Rent, vacancy rates
This paper adapts the theory of efficiency wages to explain the natural vacancy rate in rental housing markets. A positive vacancy rate provides landlords an incentive to invest in
maintenance because if they fail to do so, some tenants will leave and the unit will sit vacant for a finite period of time. The resulting foregone rent will penalize landlords’ failure
to maintain. Habitability laws, which have been enacted by states since the 1960s, provide a non-market penalty which lessens the need for market enforcement. Variation in these
laws by state offers an opportunity to test the theory.
Private Rental
Efficiency rents : A new theory of the natural vacancy rate for rental housing - Journal of Housing Economics, 2013. - 5 pages
KEYWORDS: Rent, vacancy rates
This paper adapts the theory of efficiency wages to explain the natural vacancy rate in rental housing markets. A positive vacancy rate provides landlords an incentive to invest in
maintenance because if they fail to do so, some tenants will leave and the unit will sit vacant for a finite period of time. The resulting foregone rent will penalize landlords’ failure
to maintain. Habitability laws, which have been enacted by states since the 1960s, provide a non-market penalty which lessens the need for market enforcement. Variation in these
laws by state offers an opportunity to test the theory.
Private Rental