Research
Working papers
Housing Regulation and Neighborhood Sorting Across the United States
Honorable mention for best student paper at the 2024 Urban Economics Association European meeting.
Winner of the Bank of Canada Student Award.
Abstract:
In this paper, I consider the effect of minimum lot size regulation on welfare and urban structure. I show that minimal lots are the most expensive in the low-density neighborhoods of productive cities relative to others, and this can explain the sorting on income into these cities and neighborhoods. Motivated by this evidence, I construct a general equilibrium model in which households of heterogeneous incomes choose cities and neighborhoods, value affluent neighbors, and are burdened differently by regulation. A counterfactual deregulation exercise shows significant and progressive welfare gains for renting households (9% of income) that offset the losses to landowners (17% of land values). The exercise also reveals two surprising results. First, any productivity gains that occur from the expansion of productive cities is largely nullified by the out-migration of affluent households who prefer regulated neighborhoods. Second, deregulation exacerbates the costs of the neighborhood choice externality arising from the demand for affluent neighbors, but only slightly. These results suggest that the most important consequence of deregulating housing markets is increasing housing affordability. Other counterfactual exercises underscore cities’ lack of incentives to unilaterally deregulate and show a significant opportunity for improved spatial targeting.
Redevelopment and Gentrification in General Equilibrium
with Guangbin Hong (New Draft)
Abstract:
Redevelopment is a major source of housing supply in dense cities, but it is spatially concentrated and often associated with gentrification and displacement. This paper studies the equilibrium consequences of redevelopment and of policies that restrict it. We first empirically evaluate a teardown tax implemented in two Chicago neighborhoods using a spatial difference-in-differences design and find that it substantially reduced demolitions and modestly curbed displacement. We then develop a dynamic general equilibrium model with forward-looking landlords who choose when to redevelop and heterogeneous households who choose across neighborhoods and vertically differentiated housing units. Redevelopment affects income sorting across neighborhoods and generates filtering dynamics over time. Model counterfactuals show that a spatially targeted teardown tax preserves old, affordable housing in treated areas but shifts redevelopment to untreated areas, raising rents there. The policy benefits lowincome households but harms middle- and high-income households, with the largest losses for the middle. Land values fall in treated areas and rise elsewhere. We conclude with a discussion of the policy implications of our findings.
Housing Supply and Affordability in Canada
with Nathaniel Baum-Snow and Aled ab Iowerth
In preparation for the Canadian Journal of Economics (invited “Viewpoint” article)
Abstract:
Since 2000, housing markets across Canada have experienced growth rates in prices that far exceed corresponding rates of household income growth. However, rents have grown at similar rates to household incomes. Annual per capital housing unit new construction rates have remained steady at about 0.007 across all types of markets since 1991, with the composition shifting markedly from single-family homes to multifamily structures. Purpose-built rental construction has recently risen from very low levels. To understand these patterns, we consider local regulatory environments and infrastructure provision, rental housing supports, sources of housing demand growth, and Canada’s macroprudential regulatory institutions and environment.