A seminar by Associate Professor Isaac Hacamo from Indiana University
Title: The Impact of Lack of Affordable Housing on Labor Markets
Abstract: Exploiting rent control laws in Portugal that rely on age cutoffs and starting lease date to determine who has access to rent control, we show that losing access to rent controlled homes increases commuting distance and lowers hourly wages by 2 percent. Despite a modest increase in number of hours worked, total salaries decline. These effects stem from workers staying in existing jobs. We rationalize these findings with a simple spatial equilibrium model with endogenous neighbourhood choice. The model suggests that losing rent control lowers equilibrium wages due to the negative impact of long commuting times on productivity. Collectively, our evidence suggests that unaffordable home prices have a critical impact on labor outcomes for those who have to live far from their workplace, suggesting that remote work policies might benefit these workers.
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