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Please note that all times are shown in the time zone of the conference. The current conference time is: 13th Aug 2022, 11:05:23am IST
Session Chair: Ronan C Lyons, Trinity College Dublin, Ireland
Room in the Arts Building, Trinity College Dublin.
Exact details to be confirmed by May 31
The local effects of relaxing land-use regulation on housing supply and rents
Buechler, Simon1; Lutz, Elena2
1Massachusetts Institute of Technology, United States of America; 2ETH Zürich, Institute for Urban and Spatial Development, Switzerland;
We examine the effect of relaxing land-use regulation on housing supply and rents at the local intra-city level. Constructing a theoretical framework based on the monocentric city model, we obtain theoretical predictions on these effects. Our framework shows that relaxing floor-to-area (FAR) restrictions lead to higher local housing supply and lower rents across the entire city, with no difference in rents between treated and non-treated areas. To bring our conceptual framework to the data, we use detailed geo-coded data from the Canton of Zurich in Switzerland from 1995 to 2020. We apply a staggered difference-in-difference model, exploiting exogenous differences in the treatment timing as identifying variation. We find that upzoning a parcel by 20% or more leads to a 13% increase in housing supply on the treated parcel in the subsequent ten years. Furthermore, changes in zoning do not significantly increase or lower rents on the treated parcels compared to the untreated parcels, confirming the predictions of our framework. Thus, we show that upzoning is an effective policy for increasing the housing supply without increasing rents at the local level.
Low-rise Buildings in Big Cities: Theory and Evidence from China
University of Reading, Henley Business School, United Kingdom;
Land use regulations have been implemented around the world and have economic consequences beyond housing markets. However, few studies have explored the determinants of these regulations in the context of developing economies. This paper sets out to understand the determinants of floor area ratio (FAR) limit — a major form of land use regulation that specifies construction density — in China. I first develop a spatial equilibrium framework that assumes that local governments set FAR limits such as to maximize endogenous local population size. I show that in equilibrium, local governments with high budgetary revenue opt to set lower FAR limits going forward to reduce negative externalities that are associated with higher density. I then employ a rich dataset of over 200,000 residential land transactions in China and a county-level panel to perform empirical analysis. I exploit exogenous variation generated by a central government administrative adjustment policy and find that a one standard deviation increase in local government budgetary revenue decreases the FAR limit by 0.6. I also find evidence indicating that the FAR design and the Chinese ‘Land Finance Model’ contribute to the country’s housing affordability issues.
Reclaiming Local Control: School Finance Reforms and Housing Supply Restrictions
Federal Reserve Board, United States of America;
This paper examines the loss of local control over public good financing as a new causal channel behind the rise of such housing supply restrictions. Local governments rely on both fiscal and land use policy to provide quality public goods. I develop a model showing losing autonomy over property taxation creates incentives to limit new development, as localities can neither self-finance nor price public goods. I then exploit California's mid-1970s landmark school finance equalization, which prevented jurisdictions from setting their desired level of education spending, as a natural experiment for this loss of control. Using linked historical data on school district finances, housing, and municipal land use policies, I show in a difference-in-differences framework that school districts with larger exclusionary motives--those that benefited most from local control of education funding--enacted more stringent land use controls and built less housing after the reforms. I find suggestive evidence of the exclusionary effects of supply restrictions. These findings have implications for the unintended effects of fiscal federalism on the housing market, namely that fiscal policy affects new development in the short run and the urban form in the long run.