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Description: Description: Description: Description: Description: Description: Description: Description: http://personal.lse.ac.uk/hilber/PC310241.JPG

 

Christian Hilber's
Personal Homepage

       
Associate Professor of Economic Geography (Reader) &
Director MSc Real Estate Economics and Finance

@ London School of Economics


Last update: November 25, 2014


NEWS,  BLOGS, PRESENTATIONS etc.

 

RECENT PUBLICATIONS AND FORTHCOMING ARTICLES:

 

My paper on the mortgage interest deduction and its impact on homeownership decisions (joint with Tracy Turner) is now forthcoming at the Review of Economics and Statistics.
(link to latest discussion paper version) (related Financial Times article)

 

My paper on the origins of land use regulations (joint with Frederic Robert-Nicoud) is now published at the Journal of Urban Economics. (link to latest discussion paper version) (related VoxEU column on causes and consequences of land use regulations) (related LSE press release)

 

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

 

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 PRESENTATIONS GIVEN:

 

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)

 

OTHER BITS AND PIECES:

 

My work (with Paul Cheshire) was featured in The Economist's Free Exchange column on Concrete gains: America's big cities are larger than Europe's. That has important economic consequences (2012/10).

 


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 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)
 

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, forthcoming. (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, forthcoming. (discussion paper)

 

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 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.

 

"The mortgage interest deduction and its impact on homeownership decisions," with Tracy M. Turner, April 2013, London School of Economics, mimeo. (Review of Economics and Statistics, forthcoming) (latest discussion paper version)

          

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.

 

"Land Use Regulation and Productivity - Land Matters: Evidence from a UK Supermarket Chain," with Paul Cheshire and Ioannis Kaplanis, March 2014, London School of Economics, mimeo. (Journal of Economic Geography, forthcoming) (latest discussion paper version)

 

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.

PAPERS NOT YET PUBLISHED

Revise and Resubmit-Stage

                       

"The Economic Implications of House Price Capitalization: A Survey of an Emerging Literature," SERC Discussion Paper No. 91, October, 2011.  (Revise and Resubmit) (SERC discussion paper) (Lincoln Institute of Land Policy working paper)

 

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.

 

"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

                       

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

 

In the Research Pipeline (currently under revision)

 

"Housing Transfer Taxes and Household Mobility: Distortion on the Housing or Labour Market?", mimeo, London School of Economics, June 2013. (with Teemu Lyytikainen) (currently under review) (discussion paper)

 

Abstract: We estimate the effect of the UK Stamp Duty Land Tax on household mobility using micro data. Exploiting a discontinuity in the tax schedule as a quasi-experimental setting, we isolate the impact of the stamp duty 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 increases from 1 to 3 percent and find that a higher stamp duty strongly negatively affects their propensity to move. The 2 percentage-point increase in the stamp duty reduces the annual rate of mobility by between 2 and 3 percentage-points or about 30 percent. This adverse effect is confined to short-distance and non-job related moves, suggesting a distortion in the housing rather than the labour market. As a cross-validation check, we also analyse the distribution of actual transaction prices and find that the tax rate increase reduces the volume of sales by roughly 30 percent.

 

"Homeownership and Entrepreneurship: The Role of Commitment and Mortgage Debt," with Philippe Bracke and Olmo Silva, May 2013, IZA Discussion Paper No. 7417. (currently under revision) (discussion paper)

 

Abstract: We study the link between homeownership and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit a fixed budget to mortgage payments. Our model predicts that: (i) mortgage commitments, by amplifying risk aversion, diminish the likelihood that homeowners start a business; (ii) the negative link between homeownership and entrepreneurship is increasing in mortgage debt; and (iii) the negative relation is more pronounced for entrepreneurs in risky sectors. Exploiting the longitudinal dimension of the British Household Panel Survey to control for unobservables, we test and confirm these predictions. Leveraged home-buyers are 30% less likely to become entrepreneurs.

 

"The Determinants of Homeownership across Europe: Panel Data Evidence", June, 2008, 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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