Saturday, September 11, 2010

Incentives Matter: Universities and Rent Control

Greg Mankiw calls it a dastardly clever scheme:
In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.
Read the whole thing to understand this unneighborly hat-trick.

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