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Land Use Regulation and Welfare

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  • Matthew A. Turner
  • Andrew Haughwout
  • Wilbert van der Klaauw

Abstract

We evaluate the effect of land use regulation on the value of land and on welfare. Our estimates are based on a decomposition of the effects of regulation into three components: an own‐lot effect, which reflects the cost of regulatory constraints to the owner of a parcel; an external effect, which reflects the value of regulatory constraints on one's neighbors; a supply effect, which reflects the effect of regulated scarcity of developable land. Using this decomposition, we arrive at a novel strategy for estimating a plausibly causal effect of land use regulation on land value and welfare. This strategy exploits cross‐border changes in development, prices, and regulation in regions near municipal borders. Our estimates suggest large negative effects of regulation on the value of land and welfare in these regions.

Suggested Citation

  • Matthew A. Turner & Andrew Haughwout & Wilbert van der Klaauw, 2014. "Land Use Regulation and Welfare," Econometrica, Econometric Society, vol. 82(4), pages 1341-1403, July.
  • Handle: RePEc:wly:emetrp:v:82:y:2014:i:4:p:1341-1403
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    File URL: http://hdl.handle.net/10.1111/ecta.2014.82.issue-4.x
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