An urban labor market with frictional housing markets: theory and an application to the Paris urban area

Abstract

We build a tractable model of frictional labor markets and segmented housing markets to study welfare effects of regulations, including spatial misallocation and deviation from competitive pricing of rents. The model is summarized by a labor demand curve depending on rents and wages, a wage curve reflecting labor market tightness and rents, and finally a rent curve reflecting employment. In this economy, the rent gradient in the flexible rent sector is higher than in a purely competitive housing market. This leads to spatial misallocation due to some employees commuting too much and some non-employed living inefficiently close to jobs. In turn, reducing generalized commuting costs reduces the rent gradient in the flexible rent sector and the cost of spatial misallocation of workers. The reduction in market rents is maximal when labor markets are less frictional and housing markets are more frictional, and welfare gains are larger when both are more efficient.

The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco

“…We do not directly observe race in our data, so we use an imputation procedure based on renters' names and addresses. 2 We find rent control has an especially large impact on preventing the displacement of racial minorities from San Francisco, suggesting that rent control helps to foster the racial diversity of San Francisco, at least among the initial cohort of renters covered by the law.…”

“…Treatment Effect on Neighborhood Quality for Tenants of Multi-Family Residence(2)(3)(4) Notes: Sample consists of all tenants between 20 and 65 years old living in San Francisco as of December 31, 1993 and in multi-family residences with 2-4 units that were built during 1900-1990 . Median household income, share of residents with college education and above, median house value, and share of unemployed are measured in the census tract that an individual is living in a given year.…”

Local multifractality in urban systems—the case study of housing prices in the greater Paris region

“…In the here relevant intra-regional context, numerous important topics are being addressed ranging from the fundamentals of Parisian housing market dynamics [35] through the study of long-term price convergence between the districts or 'arrondissement' [33] to numerous models for price indices [30,35,36,42]. Among others, the distribution of prices has been investigated in relation to labor market and transport [48,49], urban amenities [50] and more specifically the distribution of public/private schools [51] as well as social housing [52] and its socioeconomic composition [53]. Our intention is to complement this rich literature with the study of multifractality of housing price to reveal its-so far scarcely addressed-multiscale structural properties on the local level.…”

“…Since the method intends to reveal several qualitatively new characteristics of the price distribution simultaneously, we believe that the derived parameters may be effectively combined with works carried out by the above studies and models. Finally, we stress that the here utilized dataset is only able to observe characteristics of the 'flexible' part of the so-called dual housing market in Paris as theoreticized by Chapelle et al [52] and omits those of the regulated rent sector. Nonetheless, we will bring together our analysis results with social housing features in the final section of this paper.…”

Transport policies in polycentric cities

“…We are going to discuss relocation forces to have an idea of how the city structure may evolve in the long run following significant changes in transport policies. A comprehensive urban model with relocation would require to take labor, land and housing markets into consideration (Chapelle et al, 2021;Graham, 2007). We decided to avoid such complication and focus only on relocation forces.…”