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Christian Hilber
Personal Homepage
              
 
       
Associate Professor of Economic Geography (Reader) &
Director MSc Real Estate Economics and Finance
@ London School of Economics

         

Last update: June 11, 2015  


NEWS,  BLOGS, PRESENTATIONS etc.
   

   

     MY FINANCIAL TIMES VIDEO ON UK PROPERTY CRISIS  (published 8 June 2015):


Video (FT)   |   Video (YouTube)

 

MY CEP ELECTION ANALYSIS ON HOUSING AND PLANNING (published 24 April 2015):


Abstract   |   Brief on Housing and Planning   |   Video 

 

Press (selected):   LeMonde (2015/4/30)   LeMonde (2015/4/29)   Financial Times (2015/4/29)  

The Times (2015/4/28)   Financial Times (2015/4/27)   Guardian (2015/4/26)   Mirror (2015/4/24)

    

Blogs (selected):   tpa Blog (2015/4/29)

 

RECENT PUBLICATIONS AND FORTHCOMING ARTICLES:

 

"The economic implications of house price capitalization: A synthesis", forthcoming in Real Estate Economics.

 

Latest discussion paper version   

 

"The impact of supply constraints on house prices in England" (joint with Wouter Vermeulen), forthcoming in the Economic Journal.
 

Latest discussion paper version   |   Press:   The Times   Financial Times   Telegraph

 

"Land use regulation and productivity - land matters: Evidence from a UK supermarket chain" (joint with Paul Cheshire and Ioannis Kaplanis) published in Journal of Economic Geography (2015).

 

Latest discussion paper version   |   Press:   IN_grocery  

 

"The mortgage interest deduction and its impact on homeownership decisions" (joint with Tracy Turner) published in Review of Economics and Statistics (2014).

 
Latest discussion paper version   |   Press:   Financial Times

 

"On the origins of land use regulations: Theory and evidence from US Metro Areas" (joint with Frederic Robert-Nicoud) published in Journal of Urban Economics (2013).

Latest discussion paper version   |   Press:   LSE press release   VoxEU column  

 

OTHER RECENT MENTIONS IN ECONOMIST / NEWSPAPERS:

  

Economist 10/2015: House Building in Britain (Free Exchange Economics) |
Economist 4/2015: Space and the city (Leader) | Economist 4/2015: The paradox of soil (Brief)
| Financial Times 2/2015: Comment by Martin Wolf | Economist 10/12: Concrete Gains (Free Exchange) 

 

RECENT BLOGS ON INTERESTING TOPICS AND/OR COVERING MY RESEARCH:

 

Business Rates & Housing (2015/10) Help to Buy ISAs (2015/03) Help to Buy - Help to Who? (2013/06) QE: the next bubble? (2013/3) Tales of the City (2013/2) Future of British cities? (2013/1) Are British second tier cities too small? (2012/10) Does the stamp duty stop people moving house? (2012/7) Homeownership and entrepreneurship (2012/4) The beginnings of the US housing boom (2011/11) Promoting homeownership (2011/2).

 

RECENT KEYNOTES, OPENING LECTURES, PUBLIC LECTURES AND OTHER PRESENTATIONS GIVEN:

 

Presentation on 'Housing Markets and Policies in the UK, Switzerland and the US - Lessons learned' (Asian Development Bank - Asian Development Bank Institute, Tokyo, 14 May 2015) (link)

  

Presentation on 'Housing Markets and Policies in the UK, Switzerland and the US - Lessons to be learnt?' (Asian Development Bank - Asian Development Bank Institute, Tokyo, 17 December 2014) (link)

  

Updated presentation on 'The British System of Land-Use Regulation: Key Features and (Unintended) Economic Consequences'  (Centre for Cities, London, 4 December 2013) (link)

  

Presentation on 'The British System of Land-Use Regulation: Key Features and (Unintended) Economic Consequences' (Dublin Economics Workshop, Dublin, 28 June 2013) (link)

 

Presentation on 'Help to Buy' (Strategic Society Centre Public Debate, London, 5 June 2013) (link)

 

Presentation on 'Stamp Duty and Household Mobility' (cemmap Workshop, London, 23 May 2013) (link)

 


ABOUT ME

 

Position:

Associate Professor of Economic Geography (Reader) and
Director of the MSc in Real Estate and Finance at the London School of Economics

 

Research interests:

Urban and real estate economics: location choice; homeownership; housing supply and land use regulations; house price capitalization; social capital investment; education; local public finance

 

Contact details:

Address: London School of Economics, Department of Geography and Environment, Houghton Street, London WC2A 2AE, UK
Email:
c.hilber@lse.ac.uk

LSE Room: S418a

 


PUBLICATIONS    (links provide access to publication (normally £) or latest discussion paper)

ARTICLES IN ENGLISH

"The Economic Implications of House Price Capitalization: A Survey of an Emerging Literature," Real Estate Economics, forthcoming. (pdf)

 

Abstract: House price capitalization has long been thought to be a means of testing for efficiency in the local public sector. In this article I argue that the extent of house price capitalization itself may have important economic implications. In doing so I synthesize an emerging literature that explores the conditions under which public and private investments and intergovernmental transfers are capitalized into local house prices and the broader implications of such capitalization. The main insights are: (i) House price capitalization is more pronounced in locations with strict regulatory and/or geographical/physical supply constraints; (ii) capitalization can - under certain conditions - induce the provision of durable local public goods and club goods; and (iii) capitalization effects - which are habitually ignored by policy makers - have important adverse consequences for a wide range of policies such as intergovernmental aid or the mortgage interest deduction.

 

"The Impact of Supply Constraints on House Prices in England," with Wouter Vermeulen, Econonomic Journal, forthcoming. (pdf)  (Data-LPA)  (Do-file-LPA)  (Data-TTWA
(
Do-file TTWA)  (Data-COU)  (Do-file-COU)  (Data-FUR)  (Do-file-FUR) [right click to download]
 

Abstract: We model the impact of local supply constraints on local house prices in a setting in which households with idiosyncratic tastes sort endogenously over heterogeneous locations. We test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 local planning authorities in England ranging from 1974 to 2008. Exploiting exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints-measures, we find that: i) Regulatory constraints have a substantive positive impact on the house price-earnings elasticity; ii) The effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; iii) Uneven topography has a quantitatively less meaningful impact; iv) The effects of supply constraints are greater during boom than bust periods; and v) Our findings are robust to using a labour demand shock measure as demand shifter.

 

"Land Use Regulation and Productivity - Land Matters: Evidence from a UK Supermarket Chain," with Paul Cheshire and Ioannis Kaplanis, Journal of Economic Geography, 2015, Vol. 15, No. 1, 618-637. (discussion paper)

 

Abstract: We use store-specific data for a UK supermarket chain to estimate the impact of planning on store output. Exploiting the variation in policies between England and other UK countries, we isolate the impact of Town Centre First (TCF) policies introduced in England. We find they directly reduced output by forcing stores onto less productive sites. We estimate TCF policies imposed a loss of output of 32 percent on a representative store opening after their rigorous implementation in 1996. Additionally, we show that, household numbers constant, more restrictive local authorities have fewer stores and lower chain sales within their areas.

 

"The Mortgage Interest Deduction and Its Impact on Homeownership Decisions," with Tracy Turner, Review of Economics and Statistics, 2014, Vol. 96, No. 4, 618-637. (discussion paper) (replication data and procedure for article)

 

Abstract: This paper examines the impact of the combined U.S. state and federal mortgage interest deduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploiting variation in the subsidy arising from changes in the MID within and across states over time. We test whether capitalization of the MID into house prices offsets the positive effect on homeownership. We find that the MID only boosts homeownership attainment of higher income households in less tightly regulated housing markets. In more restrictive places an adverse effect exists. The MID is an ineffective policy to promote homeownership and improve social welfare.

 

"On the Origins of Land Use Regulations: Theory and Evidence from US metro areas," with Frederic Robert-Nicoud, Journal of Urban Economics, 2013, Vol. 75, 29-43. (publication) (CEPR discussion paper) (discussion paper)

 

Abstract: 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 benefit the former group via increasing property prices but hurt the latter via increasing development costs. In this setting, more desirable locations are more developed and, as a consequence of political economy forces, more regulated. These predictions are consistent with the patterns we uncover at the US metropolitan area level.

 

"Capitalization of Central Government Grants into Local House Prices: Panel Data Evidence from England," with Teemu Lyytikainen and Wouter Vermeulen, Regional Science and Urban Economics, 2011, Vol. 41, No. 4, 394-406. (publication) (discussion paper)

 

Abstract: We explore the impact of central government grants on local house prices in England using a panel data set of local authorities (LAs) from 2001 to 2008. Electoral targeting of grants to LAs by the incumbent national government provides an exogenous source of variation in grants that we exploit to identify their causal effect on house prices. Our results indicate substantial or even full capitalization. We also find that house prices respond more strongly in locations in which new construction is constrained by physical barriers. Our results imply that (i) during our sample period grants were largely used in a way that is valued by the marginal homebuyer and (ii) increases in grants to a LA may mainly benefit the typically better off property owners (homeowners and absentee landlords) in that LA.

 

"New Housing Supply and the Dilution of Social Capital," Journal of Urban Economics, 2010, Vol. 67, No. 3, 419-437. (publication) (discussion paper)

 

Abstract: 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.

 

"Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," with Ioan Voicu, Regional Studies, 2010, Vol. 44, No. 3, 355-371. (publication) (discussion paper)

 

Abstract: 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.

 

"Why Do Households Without Children Support Local Public Schools? Linking House Price Capitalization to School Spending," with Christopher Mayer, Journal of Urban Economics, 2009, Vol. 65, No. 1, 74-90. (publication) (discussion paper)

 

Abstract: 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. 

 

Corresponding Web Appendix

(Supplementary material associated with this article can be found, in the online version, at doi: 10.1016/j.jue.2008.09.001)

 

"Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge," with Paul Cheshire, Economic Journal, 2008, Vol. 118, Issue 529, F185-F221. (publication) (discussion paper)

 

"Explaining the Black-White Homeownership Gap: The Role of Own Wealth, Parental Externalities and Locational Preferences," with Yingchun Liu, Journal of Housing Economics, 2008, Vol. 17, No. 2, 152-174. (publication) (discussion paper)

 

"An Empirical Test of the Theory of Sales: Do Household Storage Constraints Affect Consumer and Store Behavior?," with David Bell, Quantitative Marketing and Economics, 2006, Vol. 4, No. 2, 87-117. (lead article) (publication) (discussion paper)

 

"Neighborhood Externality Risk and the Homeownership Status of Properties," Journal of Urban Economics, 2005, Vol. 57, No. 2, 213-241. (lead article) (publication) (discussion paper)

 

"School Funding Equalization and Residential Location for the Young and the Elderly," with Christopher J. Mayer, Brookings-Wharton Papers on Urban Affairs 2004, Issue 5, 107-148. (publication) (discussion paper)

ARTICLES IN GERMAN

"Der Einfluss von Preisaenderungen auf Angebot und Nachfrage von Immobilien: Theorie, empirische Evidenz und Implikationen," Zeitschrift fuer Immobilienoekonomie (German Journal of Property Research), Issue 1/2007, 5-20. (lead article; with extended English abstract) (The Impact of Price Changes on the Supply and Demand of Properties: Theory, Empirical Evidence, and Implications) (publication) (discussion paper - with correct equations!)

 

"Die unsichtbare Umverteilung: Beeinflussung der Bodenpreise durch staatliche Taetigkeit," DISP, 1997, No. 129, 10-15. (The Invisible Redistribution: The Influence of Governmental Activities on Land Values.) (publication)

 

"Chancen und Probleme eines europaeischen Emissionszertifikatehandels im Flugverkehr," Jahrbuch der Schweizerischen Verkehrswirtschaft, 1996, Vol. 95/96, 43-54. (Opportunities and Problems of an Emission Trading System for Air Traffic in Europe.)

HANDBOOK CHAPTERS (IN GERMAN)

"Preistheorie: Einfluss von Preisaenderungen auf Angebot und Nachfrage von Immobilien," In K.-W. Schulte (Editor), Immobilienoekonomie (4. Band: Volkswirtschaftliche Grundlagen), 2008. Munich: Oldenbourg. (Price Theory: Impact of Price Changes on Property Supply and Demand)

BOOKS (IN GERMAN)

"Standortattraktivitaet, Liegenschaftspreise und Mieten," WWZ Forschungsbericht 4/99, 1999. (Attractiveness of Locations, Property Values, and Rents. Research Report.

 

"Auswirkungen staatlicher Massnahmen auf die Bodenpreise: Eine theoretische und empirische Analyse der Kapitalisierung," Zuerich: Ruegger, 1998. (Effects of Governmental Measures on Land Values: A Theoretical and Empirical Analysis of Capitalization. Ph.D. Dissertation.) (order form) (publication - with link to content)

 

"Innovatives Management staatlicher Umweltpolitik: New Public Environmental Management," Basel: Birkhaeuser, with Stefan Schaltegger, Ruedi Kubat, and Stefan Vaterlaus, 1996. (Innovative Management of Environmental Policy: New Public Environmental Management.)

BOOK REVIEWS

"Tullock, Gordon (1994): The New Federalist," Kyklos, Vol. 50, No. 3, 445-446, 1997.

GOVERNMENT REPORTS & REPORTS FOR OFFICIAL GOVERNMENT REVIEWS

"The Impact of Restricting Housing Supply on House Prices and Affordability" Final Report. Department for Communities and Local Government, November 2010. (joint with Wouter Vermeulen) (report)
 

"The Cost of Regulatory Constraints on the British Office Market" prepared for the Barker Review of Land Use Planning, 15 May 2006. (joint with Paul Cheshire) (report)

OTHER REPORTS  

"The Effects of Supply Constraints on Housing Costs: Empirical Evidence for England and Assessment of Policy Implications" Final Report for the National Housing and Planning Advice Unit (NHPAU), July 2010. (joint with Wouter Vermeulen)

 

"The Effects of Supply Constraints on Housing Costs: Empirical Evidence for England and Assessment of Policy Implications" Interim Report for the National Housing and Planning Advice Unit (NHPAU), September 2008. (joint with Wouter Vermeulen)

 

"Education Reforms and Household Mobility" Final Report for Columbia-LSE Alliance Collaborative Research Fund Seed Grant, January 2008. (joint with Christopher J. Mayer)

WORKING PAPERS

ACCEPTED (FORTHCOMING) PAPERS

"The Economic Implications of House Price Capitalization: A Survey of an Emerging Literature," SERC Discussion Paper No. 91, March, 2015.  (Real Estate Economics, forthcoming) (latest discussion paper version)

 

Abstract: House price capitalization has long been thought to be a means of testing for efficiency in the local public sector. In this article I argue that the extent of house price capitalization itself may have important economic implications. In doing so I synthesize an emerging literature that explores the conditions under which public and private investments and intergovernmental transfers are capitalized into local house prices and the broader implications of such capitalization. The main insights are: (i) House price capitalization is more pronounced in locations with strict regulatory and/or geographical/physical supply constraints; (ii) capitalization can - under certain conditions - induce the provision of durable local public goods and club goods; and (iii) capitalization effects - which are habitually ignored by policy makers - have important adverse consequences for a wide range of policies such as intergovernmental aid or the mortgage interest deduction.

 

"The Impact of Supply Constraints on House Prices in England," with Wouter Vermeulen, April 2014, London School of Economics, mimeo. (Econonomic Journal, forthcoming) (latest discussion paper version)

 

Abstract: We model the impact of local supply constraints on local house prices in a setting in which households with idiosyncratic tastes sort endogenously over heterogeneous locations. We test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 local planning authorities in England ranging from 1974 to 2008. Exploiting exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints-measures, we find that: i) Regulatory constraints have a substantive positive impact on the house price-earnings elasticity; ii) The effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; iii) Uneven topography has a quantitatively less meaningful impact; iv) The effects of supply constraints are greater during boom than bust periods; and v) Our findings are robust to using a labour demand shock measure as demand shifter.

 

"Housing Policies in the United Kingdom, Switzerland and the United States: Lessons Learned," with Olivier Schöni, July 2015, London School of Economics, mimeo. (forthcoming as chapter in book on 'Housing Policies for Emerging Asia' edited by Asian Development Bank and as Asian Development Bank Institute Discussion Paper)

          

Abstract: We provide an analysis of the housing market and current housing policies in three highly developed Western countries: the United Kingdom (UK), Switzerland, and the United States (US). We focus on these three countries mainly due to the marked differences in their institutional settings. The UK is characterized by fiscal centralization and an extraordinarily rigid planning system. The consequences of this setting, which make housing supply extremely unresponsive to changes in house prices, are a high degree of urban containment, a severe housing affordability crisis, and housing shortage, particularly for the young. The key UK policy, Help-to-Buy, which focuses on stimulating housing demand, fails to address the affordability crisis, because increasing demand only pushes up house prices further without expanding housing supply. Fiscal decentralization and a rather lax zoning system, both encouraging residential development, and an extraordinarily low homeownership rate explain why Switzerland’s main political concerns are sprawl and rent stabilization. The countries’ key policies aim to tackle these two concerns but they themselves have some important unintended consequences. The US finally is characterized by fiscal federalism and an enormous variation in the tightness of land use restrictiveness across metro areas. The key policy concern across the country is homeownership attainment and the key policy to tackle this issue is the Mortgage Interest Deduction (MID). This policy backfires in prosperous and tightly land use regulated metro areas—‘superstar cities’—because in these places the policy-induced demand increase mainly pushes up house prices. The MID only increases homeownership attainment of higher-income households in metro areas with lax land use regulation. The net effect of the policy on homeownership attainment across the country is essentially zero. We conclude that the assessment of housing policies crucially depends on the fiscal and regulatory environment in local housing markets. Policies that stimulate housing demand such as the MID or Help-to-Buy are doomed to fail in markets with tight regulation or otherwise tight supply.

 

PAPERS NOT YET PUBLISHED

Revise and Resubmit-Stage

                       

"Do Long Distance Moves Discourage Homeownership? Evidence from England," with Sejeong Ha, SERC Discussion Paper No. 141, September 2013. (currently under review) (discussion paper)

 

Abstract: We hypothesize that as the distance of a residential move increases, the cost of collecting information on the destination housing market rises, the amount and quality of information collected fall, and the chances of making an ill-informed housing purchase decision increases, reducing the likelihood of such a purchase. Since owning relative to renting is associated with a much larger financial commitment and much higher transaction costs, the propensity to own can be expected to decrease with the distance moved. Using data from the Survey of English Housing from 1993 to 2008, we document that, consistent with our prior, an increase in the distance moved by one standard deviation decreases the probability that a household owns the next home by 3.2 percentage points.

 

Under Review

                       

"Mortgage Debt and Entrepreneurship," with Philippe Bracke and Olmo Silva, October 2015. Latest discussion paper: Bank of England Working Paper No. 561. (currently under review) (discussion paper)

 

Abstract: We study the link between mortgage debt and entrepreneurship using a model of occupational choice and housing tenure in a setting where homeowners do not default on their debt. Our model predicts that, as long as the mortgage interest rate exceeds the rate of interest on liquid wealth: (i) mortgage debt, by amplifying risk aversion, diminishes the likelihood of entrepreneurship; and (ii) the negative relation between leverage and entrepreneurship increases with income volatility. Our model also shows that the link between housing wealth and entrepreneurship is ambiguously signed because of competing portfolio and hedging effects. Using the British Household Panel Survey, we test and confirm the model’s predictions. A one standard deviation increase in leverage reduces the probability of entrepreneurship by 10%–12%.

 

"Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?," with Teemu Lyytikäinen, October 2015. Latest discussion paper: SERC Discussion Paper No. 187.  (currently under review) (discussion paper)

 

Abstract: We estimate the effect of the UK Stamp Duty Land Tax (SDLT) – a transfer tax on the purchase price of property or land – on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.

 

In the Research Pipeline (currently under revision)

 

"Regulating Housing Vacancies Away? The Paradoxical Effects of Mismatch," with Paul Cheshire and Hans Koster, December 2015. (currently under revision)

 

Abstract: Policy makers use the existence of empty houses as an argument for being more restrictive in their planning policies. So higher vacancy rates tend to trigger tighter restrictions on the supply of land. Such tighter restrictions lead to higher prices and, because of the incentives this creates for occupying housing, to lower housing vacancies (‘opportunity cost effect’). There is, however, a second effect ignored by planners: more restrictive planning policies impede the matching process in housing markets so leading to higher vacancies (‘mismatch effect’). Which of these two forces dominates is an empirical question. This is our focus here. Addressing potential reverse causation and other endogeneity concerns, we use a unique panel data set on land use regulation for 350 Local Authorities in England from 1981 to 2011. Our results show that tighter local planning constraints increase local housing vacancy rates, suggesting that the mismatch effect dominates. A one standard deviation increase in local regulatory restrictiveness causes the average local vacancy rate to increase by about 0.9 percentage points (23 percent). The same increase in local restrictiveness also causes an 8.5 percent rise in average commuting distances. The results are economically meaningful and show that pointing to the existence of vacant houses as a reason for being more restrictive in allocating land for housing is counterproductive.

 

"On the Consequences of Keeping Investors Away: Evidence from the Swiss Housing Market," with Olivier Schöni, December 2015. (currently under revision)

 

Abstract: Exploiting a unique setting provided by the Swiss ‘Second Home Initiative’ (SHI), we examine the consequences of a policy aimed at preventing the rise of ‘investment properties’ – properties not used as primary residence – on the market for primary homes. Using a difference-in-differences and a first differences approach we find that the SHI, which effectively banned the construction of new investment properties in touristic areas, lowered the transaction price of primary homes in the affected areas by about 12 percent. Roughly a quarter of this effect may be explained by a decrease in the quality of the traded properties. Our theoretical framework suggests three channels through which the policy may determine the net effect on the price of primary homes: (i) a positive amenity effect via the expected preservation of the countryside and ‘character’ of the locality, (ii) a negative effect on the local economy via an expected decrease in construction and local economic activity (e.g., tourism), and (iii) a negative effect via increasing the cost of converting a primary home into an investment property, thus lowering the net value of the conversion option. Empirically, for the case of the SHI, we find evidence for all three effects, with the latter two jointly dominating the former. We conclude that the SHI hurt primary homeowners in the least developed touristic areas most, while it did not appear to adversely affect existing owners of investment properties. Imposing higher local property taxes on investment properties would appear to be a preferable policy from a welfare economic and distributional point of view.

 

"Urban Development and Air Pollution: Evidence from a Global Panel of Cities," with Charlie Palmer, December 2014. (currently under revision) (discussion paper)

 

Abstract: We exploit a unique panel of 75 metro areas (‘cities’) across the globe and employ a city-fixed effects model to identify the determinants of within-city changes in air pollution concentration between 2005 and 2011. Increasing car and population densities significantly reduce air pollution concentration in city centers where air pollution induced health risks are greatest. These effects are largely confined to cities in non-OECD countries. Two possible mechanisms for the negative effect of car density are explored: (i) increasing car density permits a decentralization of residential and economic activity; and (ii) car usage substitutes for motorbike usage. We find limited evidence in favour of (i) and no evidence in favour of (ii). We also observe a complex relationship between income and pollution concentration as well as a general downward-trend in pollution concentration over time. Overall, our findings are indicative that densely populated polycentric cities may be ‘greener’ and ‘healthier’ than comparable monocentric ones.

 

"Local Economic Conditions and the Nature of New Housing Supply," with Jan Rouwendal and Wouter Vermeulen, mimeo, London School of Economics, August 2014. (currently under revision) (discussion paper)

 

Abstract: We present a modified open monocentric city model that assumes that land is available for conversion into new housing throughout the city. The model predicts that positive local income shocks (i) increase the city’s share of multi-family housing in new construction and (ii) lead to the construction of smaller units. We exploit the metro area samples of the American Housing Survey from 1984 to 2004 and find support for both predictions. We confirm that the adjustment process is driven by migration and is hindered by strict local land use control. Our findings imply that tight regulation may hamper metro area level labor market adjustment to positive economic shocks not only through limits on the quantity of newly supplied units but also by constraining their type to single-family houses and larger units that may be less suitable for would-be-migrants.

 

"Do English Planning Policies Make Shopping More Sustainable?", June, 2014, London School of Economics, mimeo. (with Paul Cheshire and Rosa Sanchis-Guarner) (currently under revision)

  

Abstract: Town Centre First Policies (TCFP) were introduced in England with real rigour in 1996. They restricted new retail development to traditional ‘Town Centres’ with the declared aim of making cities more ‘sustainable’ and retaining access to shops to those without cars. TCFP were introduced without evidence to support these claims and to date have not been subject to any rigorous analysis of their actual impacts on travel patterns for shopping. This paper provides the first evidence of their impact on travel for shopping trips. We use novel data on local shopping travel for 1998 and 2008 to investigate this issue. First, we analyse how shopping travel was differently affected by changes in supply of grocery stores in England as compared to Scotland. Second, we exploit the fact that shoppers within England were affected differentially by TCFP depending on their precise location with respect to Town Centres. Due to the nature of TCFP, we expect that consumers close to central locations would experience larger decreases in travel costs as supply of grocery stores increased post-1996 with respect to out-of-town locations. The results confirm this prediction. Given that most locations and population are located outside Town Centres, our findings suggest that, by restricting new retail units to Town Centres, TCFP prevented larger savings in shopping travel costs through the development of out-of-town retail.

 

"Regulating Retail to Town Centres: The Price Paid in Productivity", November, 2012, London School of Economics, mimeo. (with Paul Cheshire and Elias Einiö) (currently under revision)

  

Abstract: We exploit a unique dataset from a major UK clothing retailer to investigate the impact of ‘Town Centre First’ (TCF) – a policy that regulates retail location and competition and that tightened sharply in England and Wales in 1996 – on productivity. Using store-level panel data on labour, land and capital inputs and exploiting differential changes in the policy across UK countries, we find that the tightened land use regulation had significant adverse effects on total factor productivity and local competition. The effects on productivity are quantitatively meaningful: Our most rigorous point estimate suggests that TCF may have reduced clothing retail productivity among stores in England and Wales that started up between 1996 and 1998 by an accumulated 47% by 2010.

 

"Why Are Homeownership Rates so Different Across Europe?", June, 2014, London School of Economics, mimeo. (single authored) (currently under revision)

  

Abstract: 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.

 

Older unpublished papers

 

"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. (discussion paper)

 

Abstract: 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.

 

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

 

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