Abstract
What is the impact of the sharing economy, pioneered by companies such as Airbnb, on the housing market? In this paper, I estimate the welfare and distributional impact of Airbnb on the residents of New York City. I develop a model of an integrated housing market, in which a landlord can offer a housing unit for rent either on the traditional long-term rental market or on the newly available short-term rental market. By estimating a structural model of residential choice and linking it to detailed Airbnb usage data, I estimate the effect of such reallocation on the equilibrium rents across different housing types and demographic groups. In addition, to evaluate the gains from direct home-sharing, I estimate a supply system featuring heterogeneous costs. Overall, renters in New York City suffer a loss of $178mm per annum, as the losses from the rent channel dominate the gains from the host channel. I find that the increased rent burden falls most heavily on high-income, educated, and white renters because they prefer housing and location amenities that are most desirable to tourists. Moreover, there is a divergence between the median and the tail, where a few enterprising low-income households obtain substantial gains from home-sharing. Thus, this paper delivers a nuanced characterization of the winners and losers of the sharing economy and provides a framework for understanding the consequences of regulating such technological innovations.
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