Publications

Must Agreements Be Kept? Residential Leases during Covid-19 (w/ I. Ater, D. Genesove and E. Hoffman)- Forthcoming, Economic Journal

Abstract


We study residential lease payments during the COVID-19 pandemic. A survey of Israeli renters shows that nearly one-in-eight did not pay full rent during the first lockdown in March-April 2020. These households held back two-thirds of their contractually due rent on average. Financially fragile households with large income cuts withheld a greater share. Both formal and relational aspects of the landlord-tenant relationship affected payments: tenants paid more of their rent if their leases included formal provisions against non-payment, and less if they had strong relationships with their landlords. We use bargaining and relational contracts theories to explain our findings.

Rockets and Votes, Journal of Economic Behavior and Organization, 2019

Abstract

Citizens in many countries are forced to make their political decisions under the threat of terrorism. This paper explores the effects of rocket attacks from the Gaza Strip on voting patterns in Israeli elections between 1999 and 2015. Relying on a micro-level dataset of claims for rocket-related property damages as a proxy for the severity of the rocket attacks, I find that an additional one thousand claims in a locality increases right-bloc parties’ vote-share by about 4 percentage points. Recent attacks, initial exposure and geographical proximity lead to stronger effects on voting behavior. The results are driven by actual exposure of the locality to rocket fire rather than by the mere threat of an attack.

Effective Counter-terrorism: Rockets, Iron Dome and the Israeli Housing Market (w/ A. Zussman and N. Zussman), Journal of Policy Analysis and Management, 2019

Abstract

How effective is counter-terrorism and what are the underlying mechanisms? Relying on a unique experiment and detailed micro data from Israel, we show that the deployment of the Iron Dome anti-rocket system mitigated the negative effect of rocket attacks on house prices and lowered the price premium associated with in-house shelters. Analysis of surveys and data on purchases of anti-anxiety drugs yields evidence consistent with a psychological mechanism: by reducing the negative effects on daily routine, subjective well-being and psychological distress, Iron Dome lowered the disamenity associated with living under the shadow of the rocket threat.

Rockets: The Housing Market Effects of a Credible Terrorist Threat (w/ A. Zussman and N. Zussman), Journal of Urban Economics, 2017

Abstract

This paper explores the economic costs of conflict using a unique experiment. We analyze the effects of Hezbollah’s massive surprise rocket attack against northern Israel during the 2006 Second Lebanon War and the continued threat posed by the organization’s expanding rocket arsenal on the housing market, the labor market and patterns of migration flows and sorting. Relying on hedonic and repeat sales approaches and using a difference-in-differences identification strategy for 2000–2012, we show that the attack led to a 6–7% decline in house prices and rents in the most severely hit localities relative to other localities in northern Israel. These effects persisted until 2012, suggesting that the public continued to view the rocket threat as credible. In contrast, we find practically no effect on labor market conditions, migration flows and sorting.

Work in Progress

Real-estate Investors, House Prices and Rents: Evidence from Capital-gains Tax Changes (w/ I. Ater and E. Hoffman)


We study the dual role of real-estate investors – households who own multiple housing units – in ownership and rental housing markets. Exploiting a series of capital-gains tax changes and rich administrative data from Israel, we first show that sales by real-estate investors increased by 50% after they were unexpectedly exempt from paying capital-gains taxes. Investors predominantly sold housing units that they had been renting out, and these units were sold to first-time homeowners. Next, we exploit pre-policy local variation in the housing stock owned by investors and examine how sales induced by the tax changes affected house prices and rents. We find that a one percentage-point increase in investors' sales out of stock leads house prices to decrease by 14% and rents on new leases to increase by 10%. These effects are larger for smaller and older units, in which investors own a larger share of the stock of housing units, and for rents in new leases. The results suggest that policies that encourage investors to sell can achieve their stated objective of reducing house prices, but also run the risk of restricting the supply of rental housing and resulting in higher rents.

Minorities and Property Values: Evidence from Residential Buildings in Israel (w/ N. Zussman)- R&R, Journal of Urban Economics

This study estimates, for the first time, individuals’ valuation of living in a building with a member of a minority, by exploiting unique restricted data on about a third of Israel’s neighborhoods. We rely on the hedonic approach and use a difference-in-differences identification strategy, comparing nearby buildings that experienced either early or late entry of minorities. We find that house prices declined by 2-3% after the first move-in of Israelis of Ethiopian origin or Ultra-Orthodox Jews. Our analysis shows that New Immigrants only significantly affect prices during a massive migration wave (-10%) and indicate that Israeli Arabs do not affect prices. Results are not driven by (a) the socio-demographic profile of the minorities who enter, (b) the difference between their profile and the existing residents’ profile, (c) buyers’ and sellers’ profiles after the first minority entrance or (d) neighborhood characteristics. The findings support the hypothesis of segregation due to discrimination.

Did the 1990s IT Boom Cause the Following Employment Bust? (with E. Glaeser, N. Hausman, and K. McElheran)

In the Media


"New research shows that there is a way to cool the real estate market..." (in Hebrew). Globes, August 2021.

“1 in 8 can't pay rent due to COVID-19” (in Hebrew). Ynet, May 13, 2020.

“In Israel, Housing Construction Under Rocket Fire”. U.S. News & World Report, April 29, 2019.

“The Iron Dome Deployment Protected the Value of the Houses in the South and in the North” (in Hebrew). Globes, May 28, 2018.