Peer reviewed2018United States

Housing Productivity and the Social Cost of Land-Use Restrictions

Albouy & Ehrlich

Main finding

The authors estimate that land-use restrictions make housing substantially more expensive and impose net social costs in high-demand metropolitan areas.

Modeled restrictions raise housing costs about 15 percentage points and reduce welfare by 2.3% of income

Most important limitation

These are structural-model estimates that depend on assumptions about land, construction, amenities, and household location choices.

From the publication

Study chart · redrawn

Across calibrated assumptions, the model attributes a positive cost wedge to regulatory restrictions.

REDRAWN FROM STUDY DATAFigure 4 · Estimated effects of restrictions on housing productivity

Figure 4 · Estimated effects of restrictions on housing productivity. Values reconstructed from quantities reported by the authors at Figure 4; average calibration anchored to the authors’ reported 15-point estimate.
Calibrated restriction level	Housing-cost wedge
Low regulation	0
Average regulation	15
High regulation	30

How this study is used

Reference

Albouy & Ehrlich (2018). “Housing Productivity and the Social Cost of Land-Use Restrictions.”