defined. For instance, in the case of Iraq, the questionnaire allows to separate out private/public/governmental sector ownership from occupancy status. Moreover, household surveys may allow for country-specific ownership statuses as in the case of Peru for the category “ownership by invasion.” Starting from the occupancy status, as a preliminary step in the analysis, households have been regrouped in two mutually exclusive ownership sets: owners and non-market tenants in one group and market tenants in the second group. The first group includes outright owners, owners paying mortgage, and individuals living for free or paying a subsidized rent; market tenants are defined residually as households paying a rent. The rent paid by market tenants is reported either in monthly or annual values. Table 2 summarizes categories and regrouping specifications for each country and year.

Table 3 summarizes the main differences between tenants and owners with respect to dwellings’ and households’ characteristics, focusing on the most recent year of analysis. The share of market tenants is typically rather small in all four countries, ranging from 3.6 percent in Albania (2008) to 11.1 in Bangladesh (2010). The large majority of tenants live in urban areas: 82 percent in Albania, about 90 percent in Bangladesh, and virtually all tenants in Iraq and in Peru. In all 4 countries, individuals living in rented dwellings are concentrated in the region of the capital. For instance, one out of three in the region of Tirana (Albania) and two out of three in the region of Dhaka (Bangladesh).

The high prevalence of tenants in largely urbanized areas, and within these areas mainly in the capital region, poses a problem to the rent-imputation exercise as the characteristics of dwellings as well as rental markets in such areas might be very different compared to those in the rest of the country. Hedonic models assume that urban and rural rental markets price houses similarly, although this is well-known to be very unlikely, whereas self-assessment might be less accurate in areas of the country where the rental market is thin (or absent). Further, tenants are more likely to live in households were the household head is younger and also more educated. For example, in the case of Peru, the incidence of individuals living in households where the head has no schooling or incomplete primary education is 18 percentage points lower among tenants than among owners. By contrast, again in Peru, tenants are 19 percentage points more likely to have tertiary education than owners. Similar patterns, even if less accentuated, emerge in the other three countries. Individuals residing in rented dwellings belong to smaller households, although the difference between tenants’ and owners’ household size is significant only in the two countries with the larger household size on average. In the case of Bangladesh, there is a difference of about 1 member (-0.8 members, from an overall average of 5.3 members) and in the case of Iraq where the gap is of over 2 members (-2.3 members from an overall average household size of 8.9 members). Finally, rented dwellings, although smaller, are on average of better quality than owners’: for instance, in Bangladesh, 93 percent of tenants have electricity as opposed to 52 percent of homeowners; in Peru, 94 percent of tenants have a bathroom inside the dwelling as opposed to only 76 percent of homeowners.

# **3.2. Estimation Approaches to Rent-Imputation**

The first step of the exercise requires identifying a vector of rental values for the observed population—object of the distributional analysis. For each household, the rental value to be used in the construction of a welfare aggregate is the actual rent paid by market tenants ( h ), and the imputed rental value for home-owners and tenants not paying the market price ( h ). Information on rent paid by market tenants is generally available in TT rr household budget surveys as the regular payment to landlords for living in the dwelling, although data from OO rr other sources might be also used (e.g. administrative registers, listings, mortgage transactions, experts’ survey). Imputed rent for home-owners and non-market tenants must instead be estimated.

Several different imputation approaches have been developed, and no one has emerged as superior to others so far (Balcázar et al. 2017). Notwithstanding the lack of consensus about the best method to adopt, two approaches, in addition to excluding the housing component _tout court_ from the welfare aggregate, are commonly 7