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Better Tax Enforcement Moderates Airbnb’s Pressure on Housing Costs

Published online by Cambridge University Press:  07 April 2025

Jesse A. Ellis Open the ORCID record for Jesse A. Ellis [Opens in a new window] ,
David G. Kenchington ,
Jared D. Smith  and
Roger M. White
Jesse A. Ellis
Affiliation:
North Carolina State University Poole College of Management [email protected]
David G. Kenchington
Affiliation:
Arizona State University W.P. Carey School of Business [email protected]
Jared D. Smith
Affiliation:
North Carolina State University Poole College of Management [email protected]
Roger M. White*
Affiliation:
Arizona State University W.P. Carey School of Business
*
[email protected] (corresponding author)
Rights & Permissions [Opens in a new window]

Abstract

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The growing popularity of home-sharing platforms such as Airbnb, partly fueled by hosts’ ability to evade local taxes and regulations, has been shown to elevate housing costs by reallocating long-term housing units to the short-term rental market. This study assesses whether enhanced tax enforcement can mitigate this trend. We analyze staggered tax collection agreements between Airbnb and Florida counties, wherein Airbnb collects taxes from the hosts directly. Using a difference-in-differences methodology, we find these agreements significantly slow the growth of housing costs, highlighting the importance of tax policy in addressing the sharing economy’s influence on housing affordability.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 31
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We appreciate helpful comments from 2 anonymous referees, Olivia Burnsed, Brian Galle, Orli Oren-Kolbinger, Stacie Laplante, Christian Paparcuri, Christina Ruiz, Paul Rose, Maxence Valentin, conference participants from the 2021 FMA Annual Meeting, the 2021 Yale Conference on Law and Macroeconomics, and the 2022 Waterloo/Austin Biennial Global Taxation Symposium, and workshop participants from the University of Southampton, Universitat Pompeu Fabra, and ESADE. We also thank Mason Snow for invaluable research assistance.

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