Residential mobility and the housing market in a two-sector neoclassical growth model

The impact of residential mobility and competitive housing markets on long run growth is examined using a two-sector general equilibrium overlapping-g enerations model in continuous time. There is an infinity of agents with fi nite lives who adjust their housing consumption by moving, which is costly. We explore the model's steady-state properties, first with a free housing market, then under rent control when the market clears through restrictions on the frequency of moves. Rent controls do not just reduce welfare; they may increase the steady-state capital-labor ratio.