Restrictions on Short-term Rentals in Chicago Cut Tax Revenue

See The Effects of Short-term Rental Regulation: Insights from Chicago by Ginger Zhe Jin, Liad Wagman & Mengyi Zhong.

"Abstract

We provide an in-depth examination of short-term rental regulation in Chicago. While many cities choose between outright bans or laissez-faire strategies concerning short-term rentals, Chicago pioneered a middle ground ordinance, aiming to accommodate this market while addressing various concerns. Our analysis reveals a 16.4% decline in active listings following the ordinance, but only after the city began receiving direct data feeds from intermediary platforms. We demonstrate the effects differ for commercial operators and individual hosts. The overall decline resulted in a substantial drop in Airbnb revenues as well as in tax revenues for the city, county and state from short-term rentals, and benefited hotels. Despite minimal effects on crime citywide, we find a localized reduction in burglaries near buildings that prohibit short-term rentals as part of a new capability introduced by the ordinance."