NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Gabriel Ehrlich

Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220

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NBER Working Papers and Publications

November 2016Housing Demand, Cost-of-Living Inequality, and the Affordability Crisis
with David Albouy, Yingyi Liu: w22816
Since 1970, housing's relative price, share of expenditure, and ``unaffordability'' have all grown. We estimate housing demand using a novel compensated framework over space and an uncompensated framework over time. Our specifications pass tests imposed by rationality and household mobility. Housing demand is income and price inelastic, and appears to fall with household size. We provide a numerical non-homothetic constant elasticity of substitution utility function for improved quantitative modeling. An ideal cost-of-living index demonstrates that the poor have been disproportionately impacted by rising relative rents, which have greatly amplified increases in real income inequality.
May 2012Housing Productivity and the Social Cost of Land-Use Restrictions
with David Albouy: w18110
We use metro-level variation in land and structural input prices to test and estimate a housing cost function with differences in local housing productivity. Conditioning on housing demand, OLS and IV estimates imply that stringent regulatory and geographic restrictions increase housing prices relative to input costs substantially. The typical cost share of land is one-third and substitution between inputs is inelastic. A disaggregated analysis of regulations finds state-level restrictions are costliest, and provides a Regulatory Cost Index (RCI). Housing productivity falls with city population. Typical land-use restrictions impose costs that appear to exceed quality-of-life benefits, reducing welfare on net.

Published: David Albouy & Gabriel Ehrlich, 2018. "Housing Productivity and the Social Cost of Land-Use Restrictions," Journal of Urban Economics, .

 
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