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Housing-induced Poverty and Rent Deregulation:
A Case Study of the Czech Republic
Robert Jahoda, Dagmar Špalková

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nJAHODA, R.,D. ŠPALKOVÁ (2012). Housing-induced poverty and rent deregulation: a case study of the
Czech Republic. Ekonomický časopis / Journal of Economics, Bratislava: EÚ SAV, 60, 2, od s.
146-168, 23 s. ISSN 0013-3035.
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Motivation
n(1) we would like to carry out a closer examination of the relationship of poverty and housing
expenditures in the Czech Republic
n(2) there is currently under way a deregulation of large part of rented flats in the Czech
Republic à how it influences poverty
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Syllabus
1.Literature overview
2.Methodology and data
3.Poverty
4.Poverty and rent deregulation
5.Conclusions

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1. Literature overview
nDiscussion on financial housing affordability (Orshansky, 1965; Whitehead, 1991; Thalmann, 1999;
Bramley, 1994; Stone, 2006a)
nRatio concept à housing allowance; housing cost overburden rate
nResidual approach (Bourassa, 1996) à Kutty (2005) housing-induced poverty (HIP)
nLux, Sunega (2003); Mikeszová, Lux, Morisseau (2009)

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Syllabus
1.Literature overview
2.Methodology and data
3.Poverty
4.Poverty and rent deregulation
5.Conclusions

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2a. Methodology and data
nCzech EU-SILC 2008 - 2010
npoverty concepts
n“at-risk-of-poverty” indicator (threshold of 40 - 60 %)
nresidual income
n
n
nMSM à first round effects of policy change (assumption of unchanged household behavior)
n
n

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2b. (De)regulation - policy change
n„new beginning“ in 2007 (Act on Deregulation)
ntarget to reach the desired level (5 % of the price of “similar” flats realized at the market) by
2010 (alternatively 2012 for biggest cities)
n
n(unilaterally) maximum increase
n
n
nthe current rent, the “target” rent and the time remaining until regulation ends
nThis implies (2007) that rents should be increased by around 100 % (almost 200 % in Prague)
n
n
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2c. Data: Households with regulated rent
SILC
2005
2006
2007
2008
2009
Total N of households
4351
7483
9675
11294
9911
Of which living … regulated rent
863
1431
1737
1803
1475
Total N of households
100 %
(4.012.695)
100 %
100 %
100 %
100 %
(4.116.364)
Of which living … regulated rent
20,0 %
(802.641)
19,7 %
19,0 %
17,6 %
16,3 %
(672.702)
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DATA
nPodstata českých mikrodat EU-SILC
nPodstata evropských mikrodat EU-SILC
n(obecně) dostupnost ostatních datových souborů: Eurostat (LFS, ECHP, SES, EAS, CIS, EHIS, CSIS,
CVTS), ČSÚ (VŠPS, SRÚ) nOkamžitá dostupnost dat pro projekty výzkumu na ESF a práce s nimi
n
nEU-LFS and EU-SILC 3rd European User Conference, Mannheim, 21-22.3.2013
(http://www.gesis.org/veranstaltungen/veranstaltungs-archiv/german-microdata-lab/european-user-conf
erence-3/)
nEspelage: Eurostat data
nVan Houten: Eurofound data
n
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Syllabus
1.Literature overview
2.Methodology and data
3.Poverty
4.Poverty and rent deregulation
5.Conclusions

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3a. Intersection of absolute/relative definition of poverty (SILC, 2008)



Share of disposable income to the equalized median income
<0;0,4)
<0,4;0,5)
<0,5;0,6)
<0,6;0,7)
<0,7;inf.)
Total
Recipient of social assistance
Yes
19 737
17 908
18 281
6 360
19 507
81 793
2,0%
No
75 705
89 519
200 291
385 217
3 249 328
4 000 059
98,0%
Recipient of housing allowance
Yes
29 320
27 332
25 392
13 110
26 056
121 211
3,0%
No
66 122
80 095
193 180
378 467
3 242 778
3 960 642
97,0%
Total
95 442
107 427
218 572
391 577
3 268 834
4 081 852
100,0%
2,3%
2,6%
5,4%
9,6%
80,1%
100,0%

Reported disposal income based on income from 2007;
social benefits may be even based on the income from 2006

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3b. Intersection of HIP and relative poverty  (SILC, 2008)
Residual income indicator
Share of equalized disposable income to median income
<0;0,5)
<0,5;0,6)
<0,6;inf.)
All households
HIP
84,3%
11,6%
4,1%
100,0%
3,5%
Near poverty
29,1%
44,4%
26,5%
100,0%
5,0%
Not poor
0,6%
3,0%
96,4%
100,0%
91,5%
Total
5,0%
5,4%
89,7%
100,0%
100,0%

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3c. Intersection and the Tenure Status (in %)

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Syllabus
1.Literature overview
2.Methodology and data
3.Poverty
4.Poverty and rent deregulation
5.Conclusions

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4a. Poverty after deregulation (simple MSM)
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4b. Poverty after deregulation (simple MSM)
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4c. Poverty after deregulation (complex MSM)
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4d. Poverty after deregulation (complex MSM)
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Syllabus
1.Literature overview
2.Methodology and data
3.Poverty
4.Poverty and rent deregulation
5.Conclusions

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5a. Conclusions
nPresent indicators in the CR don’t involve “housing induce poverty” concept
nThere is a chance, that the number of household which find themselves in HIP will be doubled in
2012 (in the segment of rent flats)
nà one would expect, that government will have to tackle this problem, but …

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5b. Conclusions (future research?)
nthe number of household in HIP will be doubled, but from 3 % to 6 % in total population; doubled
or growing?
nOur MSM is rather simple:
nWill all home-owner increase rents?
nWhat will be the reaction of tenants: their income (income effect) or their patterns of living
(substitution effect)
nwhat will be the impact of economic crisis à lower prices of houses? à lower rents?

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nThank you for your attention
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