Relaxing Housing Laws was Supposed to Spur Migration. Instead, it's Slowing it Down

Conventional wisdom says that relaxing housing laws will encourage housing construction which would lead to reduction in rents and thus open up cities to new arrivals.

But what happens when that wisdom meets India’s uniquely distorted housing markets? In a recent paper "Do Housing Regulations Affect Rural-Urban Migration? Evidence from Rent Control in India", economists Arnab Dutta, Sahil Gandhi and Richard K Green reveal some unexpected truths.

Deregulating rent control in India actually dampens rural-urban migration, particularly among male workers. Using a quasi-experimental setup based on policy reforms in Karnataka and West Bengal between 1998 and 2000, the authors investigate the effects of pro-landlord rent and eviction reforms on migration and labour markets.

Their findings are anything but straightforward. In Karnataka, where landlords were allowed to raise rents without making physical upgrades, rural-to-urban migration dropped by 9% points. Meanwhile, in West Bengal, easing eviction laws paradoxically boosted female migration, but mostly for marriage migrants, not work-related migrants.

More Rent, Fewer Migrants

The study hinges on two types of reform. The first relaxed rent ceilings in Karnataka and the second allowed landlords to evict non-occupying tenants in West Bengal. In Karnataka, the lifting of rent control led to a predictable rise in both formal and informal rents.

But rather than seeing a corresponding boom in new housing construction, what emerged was a curious trend of more floor space per person, not more homes. With the market unable to expand housing supply at scale, increased rents merely translated into higher costs for would-be migrants.

Why does this matter? Because migrants, especially male workers, are far more likely to rent than own. The study confirms that households which recently moved into cities were 34% more likely to rent.

As rental prices surged and housing supply remained sluggish, cities became unaffordable for rural jobseekers. Wages in urban areas fell, not rose. This was likely due to a consequence of declining labour demand in response to reduced consumer spending from a slower pace of in-migration.

The paper argues that removing rent controls in an inelastic housing market does not fix the bottleneck but rather shifts it. What should have been a push towards mobility and productivity ended up erecting another kind of barrier.

When Marriage Drives Migration

West Bengal’s case, where eviction laws were relaxed, delivers an entirely different twist. Here total migration remained flat, but there was a sharp gender split where female migration rose by 5%, while male migration fell by 4%.

The authors trace this to marriage patterns. In India, the top reason for migration, by a wide margin, is marriage, not employment. In fact, more than 45% of all migrants move for matrimonial reasons, compared to less than 10% for work.

Eviction reform allowed landlords to reclaim long-abandoned rent-controlled units and repurpose them, often not for rent but for sale. These newly available homes were likely bought by men aiming to improve their standing in the marriage market. And it worked. More female “marriage migrants” followed, leading to increases in urban household formation, female population shares and even service-sector employment.

This radical insight reframes how urban migration is perceived in India. Economic migration is only one side of the coin; social frictions like housing access linked to marital norms play an equally powerful role. And if cities want to be inclusive, they need to plan not just for workers but for families.

Policy Alone Won’t Work

Perhaps the most important takeaway from this paper is not just about migration, but about how policy interventions behave in second-best environments. India’s urban-housing system is riddled with inefficiencies: archaic rent laws, strict floor space index regulations, sluggish building permissions and poorly enforced tenancy contracts.

In such a landscape, lifting rent controls or relaxing eviction clauses is not a neutral fix. It is an intervention that triggers a cascade of unintended consequences.

The authors call this the “second-best” problem, which means that removing one distortion in an already distorted system may actually reduce overall welfare. Karnataka’s rent reform, for example, benefitted a few wealthier renters with more floor space, but locked out potential migrants and shrank the urban workforce.

Meanwhile, eviction reform in West Bengal inadvertently boosted employment and wage growth, not by creating better labour opportunities, but by enabling more marriages.

For urban planners and policymakers, this paper offers a striking lesson. Housing policy cannot work in silos. It must be part of a broader ecosystem that includes rental housing supply, urban land markets, migrant access to credit, urban job markets and even social norms around gender and marriage. Otherwise, well-meaning reforms could do more harm than good.

This is a rich and nuanced study that connects the dots between rent control, migration, labour markets and social change in India. It shows how economics often collides with culture and how even the most rational reforms can backfire if implemented in isolation.

In a country where cities are expected to power the next leap in growth, this paper is a timely reminder that urban migration is not just about jobs, but also about homes and who gets to build a life in the city.