Working paper

The Rise of Housing Supply Regulation in the U.S.: Local Causes and Aggregate Implications

Year:

2018

Published in:

University of Southern California
housing supply regulation
productivity
wage inequality
house prices

Regulatory restrictions on housing supply have been rising in recent decades in the U.S. and have become a major determinant of house prices. What are the implications of the rise in regulation for aggregate productivity, and for wage and house price dispersion across metropolitan areas? To answer this question, I build an equilibrium model with multiple locations, heterogeneous workers and endogenous regulation. Regulation is decided by voting: homeowners want more regulation and renters want less. In locations with faster exogenous productivity growth, labor supply and house prices also grow more rapidly. Homeowners in these places vote for stricter regulation, which raises prices further and leads to greater price dispersion. High-skilled workers, being less sensitive to housing costs, sort into productive places, which leads to larger wage dispersion. Thus, wage and house price differences are amplified by regulation choices. To quantify this amplification effect, I calibrate the model to the U.S. economy and find that the rise in regulation accounts for 23% of the increase in wage dispersion and 85% of the increase in house price dispersion across metro areas from 1980 to 2007. I find that if regulation had not increased, more workers would live in productive areas and output would be 2% higher. I also show that policy interventions that weaken incentives of local governments to restrict supply could reduce wage and house price dispersion, and boost productivity

Other publications by

17 publications found

2024
Working paper

Time Use and City Size

Publisher: SSRN

Authors: Andrii Parkhomenko, Seongmoon Cho

2022
Journal article

JUE Insight: How Do Cities Change When We Work From Home?

Publisher: Journal of Urban Economics

Authors: Andrii Parkhomenko, Eunjee Kwon, Matthew J. Delventhal

2022
Working paper

Effective And Feasible Mechanisms To Support Ukrainian Researchers And Students At Risk: Opportunities, Challenges And Pitfalls

Publisher: OSF

Authors: Andrii Parkhomenko, Karishma Chhugani, Alina Frolova, Yuriy Salyha, Oksana Zlenko, Sanita Reinsone, Walter W. Wolfsberger, Oleksandra V. Ivashchenko, Megi Maci, Dmytro Dziuba, Eric Bortz, Fyodor Kondrashov, Paweł P. Łabaj, Veronika Romero, Jakub Hlávka, Taras K. Oleksyk, Serghei Mangul

2023
Journal article

Scientists Without Borders: Lessons From Ukraine

Publisher: GigaScienc

Authors: Andrii Parkhomenko, Walter W. Wolfsberger, Karishma Chhugani, Khrystyna Shchubelka, Alina Frolova, Yuriy Salyha, Oksana Zlenko, Mykhailo Arych, Dmytro Dziuba, Volodymyr Smolanka, Zeynep H Gümüş, Efe Sezgin, Alondra Diaz-Lameiro, Viktor R Toth, Megi Maci, Eric Bortz, Fyodor Kondrashov, Patricia M Morton, Paweł P. Łabaj, Veronika Romero, Jakub Hlávka, Serghei Mangul, Taras K. Oleksyk

2018
Journal article

Managers And Productivity Differences

Publisher: Review of Economic Dynamics

Authors: Andrii Parkhomenko, Nezih Guner, Gustavo Ventura