James Macek

James Macek

Research


Works in progress


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.

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, 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 gains for renters that may offset the losses to landowners. 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, the neighborhood choice externality arising from the demand for affluent neighbors matters little for the average household, but has important distributional consequences. These results suggest that the most important consequence of deregulating housing markets is increasing housing affordability.


Gentrification and Redevelopment in General Equilibrium

with Guangbin Hong

Abstract:
The age of housing stock affects sorting of high and low-income households into different neighbourhoods within a city (Rosenthal, 2009). As neighborhoods undergo development and redevelopment over time, the spatial distribution of different types of households changes considerably. There has been a heated debate on how to regulate housing redevelopment. On the one hand, redeveloping old neighbourhoods are expected to increase (high-quality) housing supply and decrease housing prices. On the other hand, such redevelopment also incurs significant gentrification and displacement of incumbent residents. To study the welfare consequences of redevelopment and relevant policies, we build a general equilibrium model that features forward-looking housing developers, heterogenous households with non-homothetic demand for housing, and costly movement across neighbourhoods. Developers choose when to (re)develop, how many units to build, and the quality of housing units. Housing quality depreciates over time, which prompts household movements. We aim to quantify the impact of various housing policies that are designed to restrict or encourage redevelopment.