Housing regulation and productivity
Hsieh and Moretti are using a spatial equilibrium model and data from 220 US metropolitan areas to show that high productivity cities that have housing supply restrictions are limiting the number of workers who have access to such high productivity and hence lower aggregate growth.
“It is important to highlight that while the right tail of the distribution of local TFP has thickened, the right tail of the distribution of employment across cities has not. Intuitively, this is because some of the cities with largest TFP gains— most importantly New York, San Jose, and San Francisco—are also some of the most supply-constrained housing markets in the US. As we will see in detail later, strong TFP gains in these cities have not translated in larger employment but in higher housing costs and a higher marginal product of labor relative to other US cities”
Housing Constraints and Spatial Misallocation
Authors: Chang-Tai Hsieh, Enrico Moretti
From: University of Chicago – University of California, Berkeley
Housing regulation, productivity and house prices
“When supply is highly regulated, prices are higher and population growth is smaller relative to the level of demand. The regulation of America’s most productive places seems to have led labor to locate in places where wages and prices are lower, reducing America’s overall economic output in the process. The older, richer buyers in America’s most regulated areas have experienced significant increases in housing equity. The rest of America has experienced little growth in housing wealth over the past 30 years.”
The Economic Implications of Housing Supply
Authors: Ed Glaeser and Joe Gyourko
From: Harvard University – Wharton
