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The welfare effects of eviction policies

by  Tyler Cowen November 2, 2021 at 5:50 am in

  * Economics
  * Law

    This paper studies the implications of rental market policies
    that address evictions and homelessness. Policies that make it
    harder to evict delinquent tenants, for example by providing
    tax-funded legal counsel in eviction cases ("Right-to-Counsel")
    or by instating eviction moratoria, imply eviction and
    homelessness are less likely given default. But higher default
    costs to landlords lead to higher equilibrium rents and lower
    housing supply. I quantify these tradeoffs in a model of rental
    markets in a city, matched to micro data on rents and evictions
    as well as shocks to income and family structure. I find that
    "Right-to-Counsel" drives up rents so much that homelessness
    increases by 15% and welfare is dampened. Since defaults on rent
    are driven by persistent income shocks, stronger protections are
    ineffective in preventing evictions of delinquent tenants, and
    lead to a large increase in default premia. In contrast, rental
    assistance lowers renters' default risk and as a result reduces
    homelessness by 45% and evictions by 75%, and increases welfare.
    Eviction moratoria can prevent a spike in evictions following a
    rare economic downturn, as long as they are used as a temporary
    measure.

Here is the paper, that is by Boaz Abramson, who is currently on the
job market from Stanford.

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