"On the origins of land use regulations: The 'influential landowner' hypothesis," with Frederic Robert-Nicoud, March, 2009, mimeo, London School of Economics and University of Geneva.

 

We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints are interpreted as shadow taxes that increase the land rent of already developed plots and increase the cost of developing new housing units. At equilibrium, locations with nicer amenities (or lower development costs) are more developed and, as a consequence, more regulated. We test our model predictions by geographically matching amenity, land use, and historical Census data to metropolitan area level survey data on regulatory restrictiveness. Following the predictions of the model, we use access to the coast as an instrumental variable and we control for a number of alternative explanations in order to demonstrate that metropolitan areas with better access are more developed and more tightly regulated. Consistent with theory, more regulated metropolitan areas also grow more slowly.

 

New Housing Supply and the Dilution of Social Capital," November, 2008, London School of Economics. (conditionally accepted at Journal of Urban Economics)

 

This paper examines the role of local housing supply conditions for social capital investment. Using an instrumental variables approach and data from the Social Capital Community Benchmark Survey, it is documented that the positive link between homeownership and individual social capital investment is largely confined to more built-up neighborhoods (with more inelastic supply of new housing). The empirical findings provide support for the proposition that in these localities house price capitalization provides additional incentives for homeowners to invest in social capital. The findings are also largely consistent with the proposition that built-up neighborhoods provide protection from inflows of newcomers that could upset a mutually beneficial equilibrium involving reciprocal cooperation. However, the results do not appear to be driven by selection based on inherent differences in social aptitudes or by Tiebout sorting.

 

"Local Economic Conditions and the Nature of New Housing Supply," with Jan Rouwendal and Wouter Vermeulen, London School of Economics, mimeo, November 2008.

 

We explore the impact of local economic conditions on the type and size of newly constructed housing. A slightly modified standard open monocentric city model predicts that, as long as land use regulation is relatively lax, positive local income shocks cause construction of more multifamily housing and smaller units. Exploiting metro area-level American Housing Survey (AHS) data from 1984 to 2004, we confirm that (i) local economic shocks have the predicted effects, (ii) these effects are confined to metro areas with relatively lax land use regulation, and (iii) the adjustment process appears to be driven by migration (as is assumed in the open monocentric city model). Hence, severe land use controls may hamper metro area labor market adjustment not only through limits on the quantity of newly supplied units, but also by constraining their type to housing that is less suitable for migrants.

 

"The Determinants of Homeownership across Europe: Panel Data Evidence", December, 2007, London School of Economics, mimeo. (single authored)

 

This paper exploits the panel structure of the ECHP micro data and uses fixed effects-specifications to identify the main determinants of equilibrium housing tenure outcomes across Europe between 1994 and 2001. The accommodation type which affects both the relative supply of and demand for owner-occupied housing has the strongest impact. Holding occupant and location characteristics (including preferences for homeownership) constant, a flat in a small apartment building has a roughly 40 percentage points lower probability of being owner-occupied than a detached house. Among the occupants’ characteristics, only age has a quantitatively meaningful positive impact. At the regional level, the housing stock composition and the share of public rental housing are the main identifiable determinants of the vast homeownership rate differentials. Tax policy reforms have only had relatively minor effects on homeownership attainment and, counter to widespread perception; spatial differences in intergenerational cohesion do not explain homeownership rate differentials.

 

"Why Do Households Without Children Support Local Public Schools? Linking House Price Capitalization to School Spending," with Christopher J. Mayer, September 2008, London School of Economics, mimeo.
  

Corresponding Web Appendix

 

While residents receive similar benefits from many local government programs, only about one-third of all households have children in public schools.  We argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools.  We identify a proxy for the extent of capitalization—the supply of land available for new development—and show that towns in Massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock.  Towns with little available land also spend more on schools.  We extend these results using data from school districts in 46 states, showing that per pupil spending is positively related to the percentage of developed land.  This positive correlation persists only in districts where the median resident is a homeowner and is stronger in districts with more elderly residents who do not use school services and have a shorter expected duration in their home.  Our findings support models in which capitalization encourages the provision of durable local public goods and provides an additional reason why some elderly support local school spending. 

 

"Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," with Ioan Voicu, September, 2007, London School of Economics, mimeo. (revised version forthcoming in Regional Studies)

 

We exploit the large inflow of FDI into Romania, after the revolution in 1989, to study the determinants of FDI location in transition economies. Using a conditional logit setup and choice-specific fixed effects, we find that external economies from service agglomeration are the main determinant of FDI-location. An increase in service employment density by 10 percent makes the average Romanian county 11.9 percent more likely to attract a foreign investor. Industry specific foreign and domestic agglomeration economies and labor conflicts also impact FDI-location. A comparison with findings of other studies suggests that service agglomeration economies may be geographically quite localized.

 

"Explaining the Black-White Homeownership Gap: The Role of Own Wealth, Parental Externalities and Locational Preferences," with Yingchun Liu, August 2007, London School of Economics, Research Papers in Environmental and Spatial Analysis, No. 124. (revised version published in Journal of Housing Economics)

 

 

"New Housing Supply and the Dilution of Social Capital," August, 2007, London School of Economics, Research Papers in Environmental and Spatial Analysis, No. 123 (revise and resubmit)

 

This paper examines the role of local housing market conditions for social capital accumulation and neighborhood club good provision. A model of individual investment decisions predicts that in a setting with high property transaction costs (i) homeowners are more likely to invest in social capital than renters and (ii) the positive link between homeownership and social capital is stronger in more built-up neighborhoods with inelastic supply of new housing. In these neighborhoods homeowners are largely protected from inflows of newcomers that would dilute the net benefit from social capital in the longer run. Empirical evidence from the Social Capital Community Benchmark Survey confirms the model predictions. Instrumental variable estimates suggest that the effects are causal.

 

"Office Supply Restrictions in Britain: The Political Economy of Market Revenge," with Paul Cheshire, MPRA Paper No. 5435, April, 2007. (revised version published in Economic Journal)

 

 

"Why Do Households Without Children Support Local Public Schools?," with Christopher J. Mayer, September, 2004, NBER Working Paper w10804. (Revised: September 2006)

 

 

"Homeownership and Land Use Control: A Dynamic Model with Voting and Lobbying," with Frederic Robert-Nicoud, January 2007, Research Papers in Environmental and Spatial Analysis, No 119.

 

Homeowners have incentives to control and limit local land development and anecdotic evidence suggests that 'homevoters' indeed actively support restrictive measures. Yet, US metro area level homeownership rates are strongly negatively related to corresponding measures of the restrictiveness of land use regulation. To shed light on these seemingly contradictory stylized facts, we present a dynamic model with a planning board that maximizes a weighted social welfare function (SWF). The SWF can be interpreted as the reduced form of various political economy models of voting and lobbying. We consider three special cases: a median voter model, a probabilistic voting model, and an 'influence for sale' model. In all three cases conditions exist that predict outcomes which are consistent with the presented stylized facts. Generally, our model predicts that the homeownership rate has an ambiguous effect on the regulatory restrictiveness.

 

"Owners of Developed Land versus Owners of Undeveloped Land: Why Land Use is More Constrained in the Bay Area than in Pittsburgh," with Frederic Robert-Nicoud, November, 2006, London School of Economics, CEP Discussion Paper, No. 760.

 

We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints are interpreted as shadow taxes that increase the land rent of already developed plots and reduce the amount of new housing developments. In general equilibrium, locations with nicer amenities are more developed and, as a consequence, more regulated. We test our model predictions by geographically matching amenity, land use, and historical Census data to metropolitan area level survey data on regulatory restrictiveness. Following the predictions of the model, we use amenities as instrumental variables and demonstrate that metropolitan areas with better amenities are more developed and more tightly regulated than other areas. Consistent with theory, metropolitan areas that are more regulated also grow more slowly.

 

"Office Supply Restrictions in Britain: The Political Economy of Market Revenge," with Paul Cheshire, November, 2006, London School of Economics, Research Papers in Environmental and Spatial Analysis, No 117. (Significantly revised version published in Economic Journal)

 

 

"Agglomeration Economies and the Location of Foreign Direct Investment: Quasi-Experimental Evidence from Romania," with Ioan Voicu, March, 2006, London School of Economics, Research Papers in Environmental and Spatial Analysis, No 105.

 

 

"Der Einfluss von Preisaenderungen auf Angebot und Nachfrage von Immobilien: Theorie, empirische Evidenz und Implikationen," Working Paper, February 2006 . (The Impact of Price Changes on the Supply and Demand of Properties: Theory, Empirical Evidence, and Implications.) (Revised version published in Zeitschrift fuer Immobilienoekonomie).

 

 

"An Empirical Test of the Theory of Sales: Do Household Storage Constraints Affect Consumer and Store Behavior?," with David Bell, December, 2005. (Working paper version; revised version published in Quantitative Marketing and Economics)

 

 

"Social Capital and Neighborhood Clubs: The Role of the Housing Market," November, 2005, Working Paper prepared for presentation at the 52nd Annual North American Meetings of the RSAI.

 

 

"Do Homeowners Always Invest More in Social Capital? The Role of House Price Capitalization," November, 2004, Working Paper prepared for presentation at the 51st Annual North American Meetings of the RSAI.

 

 

"Neighborhood Externality Risk and the Homeownership Status of Properties," LSE Working Paper, Research Papers in Environmental and Spatial Analysis, No. 94, October, 2004. (Working paper version with appendix; paper without Appendix published in Journal of Urban Economics).

 

 

"School Funding Equalization and Residential Location for the Young and the Elderly," with Christopher J. Mayer, February 2004. (Working paper version; revised version published in Brookings-Wharton Papers on Urban Affairs 2004).

 

 

"Why Do Households Without Children Support Local Public Schools?  Linking House Price Capitalization to School Spending," with Christopher J. Mayer, Federal Reserve Bank of Philadelphia Working Paper, No. 02-10, June, 2002.

 

 

"Housing Affordability and Land Prices: Is There a Crisis in American Cities?," with Edward Glaeser and Joseph Gyourko, December, 2001.