Research
Working papers
Housing Regulation and Neighborhood Sorting Across the United States
(Job Market Paper)
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
Abstract:
Housing redevelopment is a key source of new housing supply, but it is often associated with neighborhood gentrification. This paper examines the interaction between redevelopment and gentrification, as well as the effect of a teardown tax policy intended to curb both. Using a spatial difference-in-differences approach, we estimate that a \$15,000 teardown tax implemented in two Chicago neighborhoods reduced demolitions by 58% within the treated areas. We complement this result with evidence that redevelopment activity substantially increased neighborhood average income. Motivated by these findings, we develop a general equilibrium model featuring forward-looking landlords and heterogeneous households with varying willingness to pay for housing quality. Landlords decide when to redevelop and how many housing units to build, with new housing being of high quality that depreciates over time and filters to low-income households. Counterfactual results reveal that an expanded \$60,000 teardown tax targeted at five neighborhoods in Chicago significantly shifts redevelopment and gentrification to other parts of the city, particularly neighborhoods with a more affordable housing stock. These findings have important implications for local governments considering anti-gentrification policies.
Works in progress
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)