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Metropolitan Land Values and Housing Productivity

  • David Albouy
  • Gabriel Ehrlich

We present the first cross-sectional index of directly-measured land values by metropolitan area, which we use to estimate a housing cost function. This specification incorporates non-land input prices, fits the data well, and passes several econometric tests, validating our design and data. It indicates lands national average cost share is one-third, and the elasticity-of-substitution between inputs is one-half. Greater geographic and regulatory constraints predict housing prices substantially higher than predicted by input prices, supporting the prediction that constraints reduce production efficiency. Estimated housing productivity falls with city population and density. The efficiency costs of typical land-use regulations appear to outweigh associated quality-of-life benefits.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18110.

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Date of creation: May 2012
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Handle: RePEc:nbr:nberwo:18110
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  17. Jesse M. Shapiro, 2006. "Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 324-335, May.
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