The Role of Micro-Entrepreneurship in Emerging Land Markets

The government of Cuba has recently allowed its citizens to buy, sell, and rent property as part of a broader set of reforms that foster land market liberalization and micro-entrepreneurship by way of self-employment. For the Cuban government, this set of policies addresses the dual goals of creating wealth and increasing the housing stock. Such changes, however, could favor one goal to the detriment of the other. This research will assess how the formalization of rental markets and micro-entrepreneurship in Cuba affects access to affordable housing and the possibilities of market entry for landlords. We developed hedonic pricing models using online rental ads to analyze the interactions between short- and long-term rental markets in Havana. We also interviewed property owners to analyze the dynamics of their social network, as well as state and non-government actors involved in the emerging land market, and review existing policies to assess barriers to market entry. Results from this research provide insight into possible spillover effects from property regularization in urban areas, as well as possible institutional barriers that hinder entry to housing rental markets in transitioning economies.