The impact of income inequality on rental affordability

12th Jul 2017

The impact of income inequality on rental affordability: An empirical study in large American metropolitan areas

A new article by Hongwei Dong is now available online

Abstract

American metropolitan areas have experienced rising income inequality and worsening rental affordability in the past few decades. Has the rise of inequality caused worsening rental affordability? This study conducts both cross-sectional and longitudinal analyses to examine the impact of income inequality on rental affordability for low-income tenant households at the county level in America’s largest 100 metropolitan areas. The cross-sectional analyses reveal that, everything else equal, an increase of Gini coefficient by 0.1 in a county was associated with 2.2 and 4.4 percentage points more severely rent-burdened low-income households in 2000 and 2008–2012, respectively. The longitudinal analyses confirm that rising income inequality caused worsening rental affordability for low-income tenant households in large American metropolitan areas between 2000 and 2008–2012. On average, counties that experienced a 0.1 greater increase in Gini coefficient from 2000 to 2008–2012 saw faster growth of severely rent-burdened low-income tenant households by 2.9 percentage points.

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