Working Paper: CEPR ID: DP7604
Authors: Christian A. L. Hilber; Frédéric Robert-Nicoud
Abstract: We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints benefit the former group (via increasing property prices) but hurt the latter (via increasing development costs). More desirable locations are more developed and, as a consequence of political economy forces, more regulated. Using an IV approach that directly follows from our model we find strong and robust support for our predictions. The data provide weak or no support for alternative hypotheses whereby regulations reflect the wishes of the majority of households or efficiency motives.
Keywords: housing supply; land ownership; land use regulations; zoning
JEL Codes: H7; Q15; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory restrictiveness (L51) | lobbying game (D72) |
| share of developed land (Q24) | regulatory restrictiveness (L51) |
| desirable cities (R23) | share of developed land (Q24) |