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Local causes and aggregate implications of land use regulation

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  • Parkhomenko, Andrii

Abstract

I study why some cities have strict land use regulation, how regulation affects the U.S. economy, and how policymakers can mitigate its negative consequences. I develop a quantitative spatial equilibrium model where local regulation is determined endogenously, by voting. Landowners in productive cities with attractive amenities vote for strict regulation. The model accounts for 40% of the observed differences in regulation across cities. Quantitative experiments show that excessive local regulation reduces aggregate productivity, but not necessarily welfare because, unlike renters, landowners benefit from regulation. I propose federal policies that raise productivity and welfare by weakening incentives to regulate land use.

Suggested Citation

  • Parkhomenko, Andrii, 2023. "Local causes and aggregate implications of land use regulation," Journal of Urban Economics, Elsevier, vol. 138(C).
  • Handle: RePEc:eee:juecon:v:138:y:2023:i:c:s009411902300075x
    DOI: 10.1016/j.jue.2023.103605
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    More about this item

    Keywords

    Land use regulation; Spatial equilibrium; Productivity; Housing;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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