Fiscal policy allocation is not purely determined by the labour-capital conflict, but increasingl... more Fiscal policy allocation is not purely determined by the labour-capital conflict, but increasingly around cross-class housing coalitions. Although rising house prices are conventionally understood as drivers of fiscal austerity, this view has been challenged. Alternatively, governments may use fiscal policies to support house price growth to meet the primary economic interests of homeowners and compensate non-homeowners through the welfare system. Using an econometric analysis of 19 advanced economies between 1980 and 2018, we show house prices have positive effects on taxation revenue as well as fiscal spending on public investment, welfare and education. A second multi-level analysis provides a political explanation of this observed outcome by demonstrating parties respond to rising house prices by proposing more welfare and public investment spending in their manifestos. Conterminously rising house prices and rents also lead to greater welfare spending, suggesting governments use fiscal policy to protect those excluded from homeownership from labour market risks.
East-Central Europe is often perceived in the literature discussing housing as an area unified by... more East-Central Europe is often perceived in the literature discussing housing as an area unified by its common state-socialist legacy. Based on data covering developments in housing tenure and housing policy in the past 140 years in seven East-Central European countries, we trace the long history of a division between a northern (Germany, Poland and Czechia) and southern (Hungary, Romania, Bulgaria, and partially Slovakia) group of countries in terms of their support for and share of housing in collective (cooperative and nonprofit rental) versus private ownership. We find that the initially less urbanized and industrialized southern group started out with a weak cooperative tradition, focused state support on home ownership under state socialism and privatized more radically post-1990. The paper argues that differences between the two groups, persisting despite the number of transformative changes affecting the region, are rooted in different housing policy choices made by (predecessor) states before and following World War I.
Modern welfare states compete with private providers of welfare in offering economic security. Th... more Modern welfare states compete with private providers of welfare in offering economic security. This is most evident in the case of pensions competing with life insurance and private pensions as well as of public health insurance competing with private insurance providers. The common view of this public-private relationship is one of a trade-off: longitudinally, political scientists describe how retrenchment was pushed by privatized welfare, whereas economists trace the crowding-out of private to public welfare provisions. Crosssectionally, they claim that countries have lower public spending levels because they have a large private sector. We suggest a more nuanced view. Drawing on a new long-run panel data of public pension and private life insurance expenditures and contributions in 20 OECD countries since Bismarck to the current day, we show that in the postwar years a cross-sectional trade-off emerged, which then faded. Longitudinally, complementary relationships of public and private provision growth have become the norm. We argue theoretically and show empirically that trade-offs only occur if governments still hold (waning) antiinterventionist and pro-market views.
Most studies of the evolution of homeownership have focused on the national level rise of homeown... more Most studies of the evolution of homeownership have focused on the national level rise of homeowner societies while ignoring their specifically urban dimension. This chapter draws on a unique data collection to summarise the long-run history of urban homeownership through three novel stylised facts: First, most cities of the Global North were tenant cities, dominated by few property owners, for centuries until the early 20th century. Second, the rise of homeowner societies was then predominantly driven by the largest cities’ catching up with the countryside in homeownership rates through the spread of apartment ownership and urban mortgage debt. Third, the recent decline in homeownership is again largely urban and linked to a return of the rentier city, this time with not only rich households but institutional investors acting as the new landlords.
Housing bubbles and crashes are catastrophic events for economies, implying enormous destruction ... more Housing bubbles and crashes are catastrophic events for economies, implying enormous destruction of housing wealth, financial default risks, construction unemployment, and business cycle downturns. This paper investigates whether governmental housing policies can affect economies’ propensity to build up speculative house price bubbles. Specifically, we focus on the liberalization effects of rent and credit regulation as well as homeownership and austerity policies. Drawing on a long-run time series from 16 countries since 1870, we identify speculative price bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls make bubbles less likely to emerge by dampening price increases, while certain homeownership and tenant subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.
Contemporary capitalist societies use different institutions to manage economic risks. While diff... more Contemporary capitalist societies use different institutions to manage economic risks. While different public welfare state and financial institutions (banks, capital markets) have been studied across coordinated and liberal market economies, the different worlds of private insurance institutions have been understudied. Building on new insurance data sets (1880-2017), we find that countries with a Maritime (USA, GBR, CAN) in contrast to the more backward Alpine (AUT, DEU, CHE) insurance tradition developed bigger life and nonlife insurance earlier, with less state-associated and reinsurance enterprises, but riskier investments steered toward financial markets. We argue that the larger and more "Maritime" the insurance sector, the more it made welfare states liberal and securities markets large. Insurance is thus a hidden factor for countries' varieties of capitalism and worlds of welfare. The recent convergence on the Maritime model, however, implies that the riskier and risk-individualizing type of private insurance has added to privatization and securitization trends everywhere.
The long-run U-shaped patterns of economic inequality are standardly explained by basic economic ... more The long-run U-shaped patterns of economic inequality are standardly explained by basic economic trends (Piketty's r > g), taxation policies or 'great levellers' such as catastrophes. This article argues that housing policy, and particularly rent control, is a neglected explanatory factor in understanding macro inequality. We hypothesize that rent control could decrease overall housing wealth, lower incomes of generally richer landlords and increase disposable incomes of generally poorer tenants. Using original long-run data for up to 16 countries (1900-2016), we show that rent controls lowered wealth-to-income ratios, top income shares, Gini coefficients, rents and rental expenditure. Overall, rent controls need to be strict in order to have tangible effects, and only the stricter historical rent controls did significantly reduce inequalities. The study argues that housing policies should generally receive more attention in understanding economic inequalities.
The comparative study of housing decommodification lags behind classical welfare state research, ... more The comparative study of housing decommodification lags behind classical welfare state research, while housing research itself is rich in homeownership studies but lacks comparative accounts of private and social rentals due to missing comparative data. Building on existing works and various primary sources, this study presents a new collection of up to forty-eight countries' social housing shares in stock and new construction since the first housing laws around 1900. The interpolated benchmark time series generally describes the rise and fall of social housing across a residual, a socialist, and a Northern-European housing group. The decline was steeper than for the classical welfare state, but the degree of erosion was surprisingly small in some countries where public housing associations remained resilient. Within the broader housing welfare state, social housing correlates positively with rent regulation and allowances, but negatively with homeownership subsidies and liberal mortgage regulation. A multivariate analysis shows that social housing is rather explained by housing shortages and complementarities with rental and welfare policies than by typical welfare state theories (GDP, political parties). Generally, the paper shows that conventional housing typologies are difficult to defend over time and argues more generally for including housing decommodification in welfare state research.
Rising within-country differences in house values are a much debated trend in the U.S. and intern... more Rising within-country differences in house values are a much debated trend in the U.S. and internationally. Using new long-run regional data for 15 advanced economies, we first show that standard explanations linking growing price dispersion to rent dispersion are contradicted by an important stylized fact: rent dispersion has increased far less than price dispersion. We then propose a new explanation: a uniform decline in real risk-free interest rates can have heterogeneous spatial effects on house values. Falling real safe rates disproportionately push up prices in large agglomerations where initial rent-price ratios are low, leading to housing market polarization on the national level.
The discipline of comparative political economy (CPE) relies heavily on aggregate, country-level ... more The discipline of comparative political economy (CPE) relies heavily on aggregate, country-level economic indicators. However, the practices of multinational corporations have increasingly undermined this approach to measurement. The problem of indicator drift is well-documented by a growing critical literature and calls for systematic methodological attention in CPE. We present the case for a rocky but ultimately rewarding middle road between indicator fatalism and indicator faith. We illustrate our argument by examining two important cases – Sweden’s recent export success and the financialization of non-financial corporations in France. A careful parsing of the data suggests corrections to common characterizations of the two cases. Swedish exports have been reshaped by intragroup trade among foreign subsidiaries of domestic corporations. The growth of financial assets held by French firms is attributable to the growth of foreign direct investment and to cumulative revaluation effects, while what remains of financialization is concentrated among the very largest firms. Based on these findings, we propose a methodological routine that parses data by zooming in on the qualitative specifics of countries, sectors, and firms, while using all available options for disaggregation.
Corporate concentration is currently being discussed as a core reason for the crisis of democrati... more Corporate concentration is currently being discussed as a core reason for the crisis of democratic capitalism. It is seen as a prime mover for wage stagnation and alienation, economic inequalities and discontent with democracy. A tacit coalition of progressive anti-monopoly critiques and small business promoters considers more deconcentrated corporate structures to be a panacea for the crisis of democratic capitalism, arguing that small firms in competition are better for employment, equality and democracy. This paper offers a brief outline of ideas of the anti-monopoly and small business ideal and critically evaluates whether a more deconcentrated economy may live up to these promises. While we agree that the plea for strengthened antitrust enforcement contains relevant and promising prospects for reform, our analysis concludes on a decidedly critical note. In particular, we caution against romanticized notions of the small capitalist firm.
Contemporary societies are not only “risk societies”, but also insurance societies. While the shi... more Contemporary societies are not only “risk societies”, but also insurance societies. While the shift of systemic risks from the community to the individual is a distinctive trait of modernity, research on the consequences of this process has focused almost exclusively on welfare state responses aimed at re-collectivizing societal risks. Individual-level reactions associated with the need for a private safety net against the uncertainty brought by risk societies have been largely overlooked. What happens to a society and its individuals when private insurance becomes commonplace? Focusing on Germany, we use the data of the German Socio-Economic Panel (1984–2018) to investigate the attitudinal antecedents and consequences of contracting private insurance. As one of the most important sources of private welfare, life insurance attracts risk-averse individuals who are highly concerned with public economic affairs and see the market-based solutions of conservative parties as the best way to safeguard their economic security. While short-term attitudinal effects are absent, a longitudinal approach reveals that becoming insured gradually increases economic security but also entails withdrawal from public life and aversion to parties that support social redistribution. The loss of dynamism of a society may thus be related not only to public welfare but also to a private institution at the heart of the financial markets, which moreover has privatizing, welfare-eroding effects. The paper argues for a more general sociology of insurance.
Fiscal policy allocation is not purely determined by the labour-capital conflict, but increasingl... more Fiscal policy allocation is not purely determined by the labour-capital conflict, but increasingly around cross-class housing coalitions. Although rising house prices are conventionally understood as drivers of fiscal austerity, this view has been challenged. Alternatively, governments may use fiscal policies to support house price growth to meet the primary economic interests of homeowners and compensate non-homeowners through the welfare system. Using an econometric analysis of 19 advanced economies between 1980 and 2018, we show house prices have positive effects on taxation revenue as well as fiscal spending on public investment, welfare and education. A second multi-level analysis provides a political explanation of this observed outcome by demonstrating parties respond to rising house prices by proposing more welfare and public investment spending in their manifestos. Conterminously rising house prices and rents also lead to greater welfare spending, suggesting governments use fiscal policy to protect those excluded from homeownership from labour market risks.
East-Central Europe is often perceived in the literature discussing housing as an area unified by... more East-Central Europe is often perceived in the literature discussing housing as an area unified by its common state-socialist legacy. Based on data covering developments in housing tenure and housing policy in the past 140 years in seven East-Central European countries, we trace the long history of a division between a northern (Germany, Poland and Czechia) and southern (Hungary, Romania, Bulgaria, and partially Slovakia) group of countries in terms of their support for and share of housing in collective (cooperative and nonprofit rental) versus private ownership. We find that the initially less urbanized and industrialized southern group started out with a weak cooperative tradition, focused state support on home ownership under state socialism and privatized more radically post-1990. The paper argues that differences between the two groups, persisting despite the number of transformative changes affecting the region, are rooted in different housing policy choices made by (predecessor) states before and following World War I.
Modern welfare states compete with private providers of welfare in offering economic security. Th... more Modern welfare states compete with private providers of welfare in offering economic security. This is most evident in the case of pensions competing with life insurance and private pensions as well as of public health insurance competing with private insurance providers. The common view of this public-private relationship is one of a trade-off: longitudinally, political scientists describe how retrenchment was pushed by privatized welfare, whereas economists trace the crowding-out of private to public welfare provisions. Crosssectionally, they claim that countries have lower public spending levels because they have a large private sector. We suggest a more nuanced view. Drawing on a new long-run panel data of public pension and private life insurance expenditures and contributions in 20 OECD countries since Bismarck to the current day, we show that in the postwar years a cross-sectional trade-off emerged, which then faded. Longitudinally, complementary relationships of public and private provision growth have become the norm. We argue theoretically and show empirically that trade-offs only occur if governments still hold (waning) antiinterventionist and pro-market views.
Most studies of the evolution of homeownership have focused on the national level rise of homeown... more Most studies of the evolution of homeownership have focused on the national level rise of homeowner societies while ignoring their specifically urban dimension. This chapter draws on a unique data collection to summarise the long-run history of urban homeownership through three novel stylised facts: First, most cities of the Global North were tenant cities, dominated by few property owners, for centuries until the early 20th century. Second, the rise of homeowner societies was then predominantly driven by the largest cities’ catching up with the countryside in homeownership rates through the spread of apartment ownership and urban mortgage debt. Third, the recent decline in homeownership is again largely urban and linked to a return of the rentier city, this time with not only rich households but institutional investors acting as the new landlords.
Housing bubbles and crashes are catastrophic events for economies, implying enormous destruction ... more Housing bubbles and crashes are catastrophic events for economies, implying enormous destruction of housing wealth, financial default risks, construction unemployment, and business cycle downturns. This paper investigates whether governmental housing policies can affect economies’ propensity to build up speculative house price bubbles. Specifically, we focus on the liberalization effects of rent and credit regulation as well as homeownership and austerity policies. Drawing on a long-run time series from 16 countries since 1870, we identify speculative price bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls make bubbles less likely to emerge by dampening price increases, while certain homeownership and tenant subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.
Contemporary capitalist societies use different institutions to manage economic risks. While diff... more Contemporary capitalist societies use different institutions to manage economic risks. While different public welfare state and financial institutions (banks, capital markets) have been studied across coordinated and liberal market economies, the different worlds of private insurance institutions have been understudied. Building on new insurance data sets (1880-2017), we find that countries with a Maritime (USA, GBR, CAN) in contrast to the more backward Alpine (AUT, DEU, CHE) insurance tradition developed bigger life and nonlife insurance earlier, with less state-associated and reinsurance enterprises, but riskier investments steered toward financial markets. We argue that the larger and more "Maritime" the insurance sector, the more it made welfare states liberal and securities markets large. Insurance is thus a hidden factor for countries' varieties of capitalism and worlds of welfare. The recent convergence on the Maritime model, however, implies that the riskier and risk-individualizing type of private insurance has added to privatization and securitization trends everywhere.
The long-run U-shaped patterns of economic inequality are standardly explained by basic economic ... more The long-run U-shaped patterns of economic inequality are standardly explained by basic economic trends (Piketty's r > g), taxation policies or 'great levellers' such as catastrophes. This article argues that housing policy, and particularly rent control, is a neglected explanatory factor in understanding macro inequality. We hypothesize that rent control could decrease overall housing wealth, lower incomes of generally richer landlords and increase disposable incomes of generally poorer tenants. Using original long-run data for up to 16 countries (1900-2016), we show that rent controls lowered wealth-to-income ratios, top income shares, Gini coefficients, rents and rental expenditure. Overall, rent controls need to be strict in order to have tangible effects, and only the stricter historical rent controls did significantly reduce inequalities. The study argues that housing policies should generally receive more attention in understanding economic inequalities.
The comparative study of housing decommodification lags behind classical welfare state research, ... more The comparative study of housing decommodification lags behind classical welfare state research, while housing research itself is rich in homeownership studies but lacks comparative accounts of private and social rentals due to missing comparative data. Building on existing works and various primary sources, this study presents a new collection of up to forty-eight countries' social housing shares in stock and new construction since the first housing laws around 1900. The interpolated benchmark time series generally describes the rise and fall of social housing across a residual, a socialist, and a Northern-European housing group. The decline was steeper than for the classical welfare state, but the degree of erosion was surprisingly small in some countries where public housing associations remained resilient. Within the broader housing welfare state, social housing correlates positively with rent regulation and allowances, but negatively with homeownership subsidies and liberal mortgage regulation. A multivariate analysis shows that social housing is rather explained by housing shortages and complementarities with rental and welfare policies than by typical welfare state theories (GDP, political parties). Generally, the paper shows that conventional housing typologies are difficult to defend over time and argues more generally for including housing decommodification in welfare state research.
Rising within-country differences in house values are a much debated trend in the U.S. and intern... more Rising within-country differences in house values are a much debated trend in the U.S. and internationally. Using new long-run regional data for 15 advanced economies, we first show that standard explanations linking growing price dispersion to rent dispersion are contradicted by an important stylized fact: rent dispersion has increased far less than price dispersion. We then propose a new explanation: a uniform decline in real risk-free interest rates can have heterogeneous spatial effects on house values. Falling real safe rates disproportionately push up prices in large agglomerations where initial rent-price ratios are low, leading to housing market polarization on the national level.
The discipline of comparative political economy (CPE) relies heavily on aggregate, country-level ... more The discipline of comparative political economy (CPE) relies heavily on aggregate, country-level economic indicators. However, the practices of multinational corporations have increasingly undermined this approach to measurement. The problem of indicator drift is well-documented by a growing critical literature and calls for systematic methodological attention in CPE. We present the case for a rocky but ultimately rewarding middle road between indicator fatalism and indicator faith. We illustrate our argument by examining two important cases – Sweden’s recent export success and the financialization of non-financial corporations in France. A careful parsing of the data suggests corrections to common characterizations of the two cases. Swedish exports have been reshaped by intragroup trade among foreign subsidiaries of domestic corporations. The growth of financial assets held by French firms is attributable to the growth of foreign direct investment and to cumulative revaluation effects, while what remains of financialization is concentrated among the very largest firms. Based on these findings, we propose a methodological routine that parses data by zooming in on the qualitative specifics of countries, sectors, and firms, while using all available options for disaggregation.
Corporate concentration is currently being discussed as a core reason for the crisis of democrati... more Corporate concentration is currently being discussed as a core reason for the crisis of democratic capitalism. It is seen as a prime mover for wage stagnation and alienation, economic inequalities and discontent with democracy. A tacit coalition of progressive anti-monopoly critiques and small business promoters considers more deconcentrated corporate structures to be a panacea for the crisis of democratic capitalism, arguing that small firms in competition are better for employment, equality and democracy. This paper offers a brief outline of ideas of the anti-monopoly and small business ideal and critically evaluates whether a more deconcentrated economy may live up to these promises. While we agree that the plea for strengthened antitrust enforcement contains relevant and promising prospects for reform, our analysis concludes on a decidedly critical note. In particular, we caution against romanticized notions of the small capitalist firm.
Contemporary societies are not only “risk societies”, but also insurance societies. While the shi... more Contemporary societies are not only “risk societies”, but also insurance societies. While the shift of systemic risks from the community to the individual is a distinctive trait of modernity, research on the consequences of this process has focused almost exclusively on welfare state responses aimed at re-collectivizing societal risks. Individual-level reactions associated with the need for a private safety net against the uncertainty brought by risk societies have been largely overlooked. What happens to a society and its individuals when private insurance becomes commonplace? Focusing on Germany, we use the data of the German Socio-Economic Panel (1984–2018) to investigate the attitudinal antecedents and consequences of contracting private insurance. As one of the most important sources of private welfare, life insurance attracts risk-averse individuals who are highly concerned with public economic affairs and see the market-based solutions of conservative parties as the best way to safeguard their economic security. While short-term attitudinal effects are absent, a longitudinal approach reveals that becoming insured gradually increases economic security but also entails withdrawal from public life and aversion to parties that support social redistribution. The loss of dynamism of a society may thus be related not only to public welfare but also to a private institution at the heart of the financial markets, which moreover has privatizing, welfare-eroding effects. The paper argues for a more general sociology of insurance.
On the eve of the financial crisis, the USA was inhabited by almost 70 percent homeowning househo... more On the eve of the financial crisis, the USA was inhabited by almost 70 percent homeowning households, in comparison to about 45 percent in Germany. Homeownership, Renting and Society presents new evidence showing that this homeownership gap already existed between American and German cities around 1900. Existing explanations based on culture, government housing policy or typical socio-economic factors have difficulties in accounting for these long-term cross-country differences.
Using historical case studies on Germany and the USA, the book identifies three institutional domains on the supply-side of the housing market – urban land, housing finance and construction – that set countries on different housing trajectories and subsequently established differences that were hard to reverse in later periods. Further chapters generalize the argument across other OECD (Organisation for Economic Co-operation and Development) countries and extend the explanation to cover historical differences in homeownership ideology and horizontal property institutions. This enlightening volume also puts forward path-dependence theories in housing studies, connects housing with vast urban-history and political-economy literature and offers comprehensive insights about the case of a tenant’s country which contradicts the tendency towards universal homeownership.
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This paper investigates whether governmental housing policies can affect
economies’ propensity to build up speculative house price bubbles. Specifically, we focus on the liberalization effects of rent and credit regulation as well as homeownership and austerity policies. Drawing on a long-run time series from 16 countries since 1870, we identify speculative
price bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls make bubbles less likely to emerge by dampening price increases, while certain homeownership and tenant subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.
This paper investigates whether governmental housing policies can affect
economies’ propensity to build up speculative house price bubbles. Specifically, we focus on the liberalization effects of rent and credit regulation as well as homeownership and austerity policies. Drawing on a long-run time series from 16 countries since 1870, we identify speculative
price bubbles through explosive root tests, corroborated by a narrative approach. Estimating logit models, we find that tighter rent and credit controls make bubbles less likely to emerge by dampening price increases, while certain homeownership and tenant subsidies and government austerity increase the likelihood of bubbles. The paper illustrates the logic of rent, credit, homeownership and austerity effects with two case studies.
Using historical case studies on Germany and the USA, the book identifies three institutional domains on the supply-side of the housing market – urban land, housing finance and construction – that set countries on different housing trajectories and subsequently established differences that were hard to reverse in later periods. Further chapters generalize the argument across other OECD (Organisation for Economic Co-operation and Development) countries and extend the explanation to cover historical differences in homeownership ideology and horizontal property institutions. This enlightening volume also puts forward path-dependence theories in housing studies, connects housing with vast urban-history and political-economy literature and offers comprehensive insights about the case of a tenant’s country which contradicts the tendency towards universal homeownership.