Question

In: Economics

Why do you think governments frequently attempt to control apartment rents but not house prices? OR...

Why do you think governments frequently attempt to control apartment rents but not house prices?

OR

Are there methods other than a higher minimum wage that could raise the incomes of low-wage workers without reducing employment?

Solutions

Expert Solution

Answer to Question 1)

Most economies across the globe, face some degree of income variation and classes within the society are different. Some sections of the society are more vulnerable to problems such as access to health care, nutrition and other facilities because, they lack the required capital which rich people have.

The same is the reason for rent controls economists believe. It is to ensure that poor people have access to housing and a roof on top of their heads ensures a reasonable standard of living in the society.

Thus, to promote people to live in houses, rent controls are established on one hand and on the other, rich people that have sufficient availability of capital to spend on purchasing a house are not protected form rise in price due to market factors.

This is seen as an indirect benefit to the poor people to reduce their expenditure on rent, and to make them have enough money to purchase other goods and services that will help them increase their overall welfare.

Please feel free to ask your doubts in the comments section.


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