Judge for Yourself? The Impact of Controls on Rents in Interwar New York

Abstract

As cities across the high-income world struggle with housing affordability challenges, rent controls have re-emerged as a popular policy tool. A growing body of research examines the effects of these rent controls, although the literature largely focuses on post-World War II rent controls. In 1920, New York became the first city in the US to introduce rent controls, allowing elected judges to evaluate on a case-by-case basis whether proposed increases were reasonable. The effect of these rent controls, however, is unknown. We examine, for the first time, the effects of these rent controls on market outcomes, using a spatial regression discontinuity design and comprehensive datasets of market rents, from newspaper listings, and judicial districts, including judge characteristics, for New York for the period 1918-1926. We find that rent controls cause a spillover in demand, with market rents in “pro-landlord” judge districts 10% higher than just over the border in “pro-tenant” judge districts.