NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Regulation and Housing Supply

Joseph Gyourko, Raven Molloy

NBER Working Paper No. 20536
Issued in October 2014
NBER Program(s):   PE   POL

A wide array of local government regulations influences the amount, location, and shape of residential development. In this chapter, we review the literature on the causes and effects of this type of regulation. We begin with a discussion of how researchers measure regulation empirically, which highlights the variety of methods that are used to constrain development. Many theories have been developed to explain why regulation arises, including the role of homeowners in the local political process, the influence of historical density, and the fiscal and exclusionary motives for zoning. As for the effects of regulation, most studies have found substantial effects on the housing market. In particular, regulation appears to raise house prices, reduce construction, reduce the elasticity of housing supply, and alter urban form. Other research has found that regulation influences local labor markets and household sorting across communities. Finally, we discuss the welfare implications of regulation. Although some specific rules clearly mitigate negative externalities, the benefits of more general forms of regulation are very difficult to quantify. On balance, a few recent studies suggest that the overall efficiency losses from binding constraints on residential development could be quite large.

download in pdf format
   (282 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20536

Users who downloaded this paper also downloaded* these:
Baum-Snow and Ferreira w20535 Causal Inference in Urban and Regional Economics
Hsieh and Moretti w21154 Housing Constraints and Spatial Misallocation
Glaeser and Nathanson w20426 Housing Bubbles
Glaeser, Gyourko, and Saiz w14193 Housing Supply and Housing Bubbles
Glaeser and Gyourko w8835 The Impact of Zoning on Housing Affordability
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us