The impact of housing supply restrictions

I calibrate the [spatial] model to the U.S. economy and find that the rise in regulation accounts for 23% of the increase in wage dispersion and 85% of the increase in house price dispersion across metro areas from 1980 to 2007. I find that if regulation had not increased, more workers would live in productive areas and output would be 2% higher. I also show that policy interventions that weaken incentives of local governments to restrict supply could reduce wage and house price dispersion, and boost productivity.

That is from Andrii Parkhomenko (pdf), a recent job candidate, there are 62 pp. at the link, and for the pointer I thank Tyler Ransom.

Here is a related column by Noah Smith.


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