The Long-Term Effects of Rent Regulation on Children: Evidence from World War II-Era Federal Rent Control Policy

Maxwell Fineman, Princeton University

Levels of inequality in the United States are structured by institutions that organize access to core resources, and housing markets are among the most consequential of these institutions. This paper studies how a large-scale institutional reform of the rental housing market — mid-twentieth-century federal rent control — affected children's long-run outcomes, examining how the design of market institutions shapes intergenerational inequality. While the aggregate effects of rent regulation on housing supply have been studied, the long-term effects on children and intergenerational mobility have received less attention, in part because recently implemented policies do not offer a sufficient time horizon for these outcomes to be observed. I address this limitation by studying rent control policies enacted during World War II. As wartime industrial expansion generated rapid increases in housing demand, Congress authorized the Office of Price Administration to implement rent ceilings across designated "defense rental areas." These regulations were rolled out at different times across municipalities and remained in place for varying durations, creating substantial variation in the timing and length of children's exposure to rent control. Using thousands of digitized records from the Federal Register, I construct the first comprehensive dataset of WWII-era rent control policies at the municipality level. I merge this dataset with newly linked restricted-use Census and IRS administrative data, allowing me to follow children observed in the 1940 full-count Census through 1970s–1990s-era tax returns and the 2000 long-form Census. I measure adult income, educational attainment, and neighborhood quality. To estimate causal effects, I employ a staggered cohort difference-in-differences design that exploits variation in policy timing and duration across municipalities and birth cohorts, conditioning on rich pre-treatment covariates including local defense mobilization intensity. I also examine heterogeneity by race, family socioeconomic status, and pre-policy rent burden, as well as mechanisms related to residential mobility and housing tenure.

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 Presented in Session 107. A Day in the Life