Uncontrolled Sector Research Articles

ДЕРЖАВНЕ РЕГУЛЮВАННЯ ЗАРОБІТНОЇ ПЛАТИ В УКРАЇНІ: ПРОБЛЕМНІ АСПЕКТИ ТА ШЛЯХИ ЇХ УСУНЕННЯ

The article considers topical issues of the current state of wages in Ukraine. The main reasons for the aggravation of the problem of wage regulation are highlighted. The needs for creating conditions for effective state control over the remuneration policy are substantiated. The importance of state regulation of wages, based on the real financial capabilities of the country and ensuring the balance of interests of all segments of the population, as well as the implementation of the norms contained in legislation is emphasized. The necessity of revision of the policy of regulation of the remuneration system is proved; implementation of norms and guarantees regarding the right of an employee to receive a salary, the amount of which would provide him and his family members with a sufficient standard of living; strengthening the controlling functions of the state in the process of formation and distribution of costs between levels of the economy. Measures are proposed to ensure the functioning of an effective remuneration system. With the transition of Ukraine to market management methods, the essence of such an important economic category as wages is changing dramatically. The transition requires adequate changes in the structure of distribution relations, curbing the elements of the uncontrolled sector of the “shadow” economy and restoring the crucial role of wages in the formation of cash incomes of the working population. State regulation in the field of wages is carried out according to the following vectors: through legislative instruments, tax policy, tariff agreements. The basic document is the Code of Labor Laws of Ukraine, which establishes the basic social guarantees. Also important is the tax direction of state regulation of wages, because with its help, on the one hand, economic and fiscal actions of the state, and on the other – to protect the rights of taxpayers. Legislative regulation of taxation allows centralized management of the entire tax system, which makes it an important tool of economic policy. Legislation on wages, adopted by the Cabinet of Ministers and the Verkhovna Rada of Ukraine in recent years, creates the necessary legal basis for developing an effective system of wage regulation in enterprises and industries, taking into account the general economic laws of material production and specific markets.

The Economics of Rent Control

Affordable housing is on the minds of voters and state and local officials across the country. One policy often proposed to temper high rents is rent control. In its most basic form rent control is a government-imposed cap on rent and using it as a means of keeping rents below the market rate is an old idea, dating to at least the 16th century. But while rent control may seem like an easy way to control housing prices, the bulk of the evidence shows that it’s an inefficient policy with several negative side effects. Rent control decreases the amount of rental housing, raises prices in the uncontrolled sector, reduces the quality of rental units, leads to a misallocation of units, and decreases tenant mobility. It also transfers wealth from landlords to tenants even though some landlords are poorer than their tenants, and this may foster hostility between the two groups. Instead of rent control, cities can make housing more affordable by allowing more building to enable the filtering process to work. They can also provide rent subsidies to alleviate any remaining affordability issues. By looking beyond rent control, cities can help create more affordable housing options for lower-income people.

Rent Control and Misallocation

Rent control is still an important type of government regulation of housing markets in many countries and numerous researchers have studied its implications for allocation, welfare and investments in housing. The present paper aims to improve our understanding of the effect of second-generation rent control when it is applied only to one sector of the rental market. It is diagrammatically shown that the welfare effects are very different between a universal and a limited application of rent control. Studying the Danish case of second-generation rent control, lower rents are found in controlled sectors and a minor increase of the rent in the uncontrolled sector. Using the area of living space in the dwelling as a measure for housing consumption, evidence is also produced of both overallocation and underallocation of housing in the rent-controlled sectors; as envisaged by economic theory.

Rent Control, Rental Housing Supply, and the Distribution of Tenant Benefits

This paper estimates the net benefits of rent control to tenants in New York City. Although other studies have measured these benefits, all assume that the price per unit of rental housing service in the uncontrolled sector is unaffected by the existence of rent controls. That assumption is relaxed in this study. The results suggest that, controlling for higher prices in the uncontrolled sector, the average benefit to tenants in regulated units is negative. This implies that, on average, tenants in rent regulated units would be better off if these controls had never been established.

Rent Regulations' Pricing Effect in the Uncontrolled Sector: An Empirical Investigation

Rent controls, designed to lower the cost of housing for renters, may have the perverse effect of increasingrents for tenants in the unregulated sector. Although new construction is exempt from currentrent control laws, a reduction in supply of rental housing will occur if investors are wary of futurecontrols affecting their units. Also, if controls reduce landlord maintenance, total housing supply in amarket will fall. Using 1984 to 1996 data from the American Housing Survey, this study examines therole of rent controls in determining the variations in prices of uncontrolled rental housing acrossmetropolitan areas.The results suggest a positive and statistically significant relationship between the introduction ofrent control and price in the uncontrolled sector. However, the link between controls and prices declinesthrough time and may completely disappear after 20 to 30 years with no new construction subject tocontrols.

Rent control and homelessness

The purposes of this paper are to produce more precise estimates of the effect of rent control on homelessness using microdata on housed and homeless households and to provide evidence concerning the mechanisms through which rent control might affect homelessness. Our results suggest that rent control does increase homelessness by decreasing the rental vacancy rate and increasing the rental price of housing in the uncontrolled sector but that these effects of rent control are offset by other effects that decrease homelessness. We cannot reject the hypothesis that rent control has no net effect on homelessness.

Do Vacancy Decontrol Provisions Undo Rent Control?

When rent control laws have vacancy decontrol–recontrol provisions, new tenants may offset lower future rent by paying higher current rent. Also when tenants compete for scarce apartments, those with longer durations will predominate in rental sectors that are controlled. New York City's rent stabilization has a vacancy decontrol–recontrol provision. As expected, I find that in 1981 tenants new to New York City's rent-stabilized sector paid higher rent than those who occupied comparable apartments in an uncontrolled sector. However, these same stabilized-sector tenants wound up paying less in 1987, provided that they still occupied the apartments. Furthermore, those who chose the stabilized sector had longer durations than those who chose the uncontrolled sector.

Estimating the Costs of Partial-Coverage Rent Controls: A Stochastic Frontier Approach

This paper presents a modified frontier approach to estimate hedonic regressions for data on rent-controlled and uncontrolled apartments. This new approach allows the author to estimate the size of the subsidy from landlords to tenants of rent-controlled apartments. In addition, this method provides the first estimates of the amount by which controls increase rents for uncontrolled apartments. The study shows that, in New York City in 1968, rents in the controlled sector would rise 22 to 26 percent upon decontrol, while rents in the uncontrolled sector would fall about 22 to 25 percent upon removal of rent controls. Copyright 1993 by MIT Press.

Incomes policy reconsidered

In this study a large data base of individual contract data is used to analyse the impact of wage controls on different groups in the Canadian unionized private sector. Of particular interest is the behavior of the controlled relative to the uncotrolled sector. Statistically significant reductions in wage inflation are discerned both sectors with the effect in the controlled sector being, approximately, twice large as that in the uncontrolled sector.