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Housing Constraints and Spatial Misallocation

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  • Moretti, Enrico
  • Hsieh, Chang-Tai

Abstract

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by 36% from 1964 to 2009.

Suggested Citation

  • Moretti, Enrico & Hsieh, Chang-Tai, 2018. "Housing Constraints and Spatial Misallocation," CEPR Discussion Papers 12912, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12912
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    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
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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