Monday, May 22, 2017

Stringent restrictions to new housing supply lowered aggregate US growth by more than 50% from 1964 to 2009.

See The new Hsieh and Moretti paper on land use restrictions and economic growth. From Marginal Revolution.
"We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.
Here is the pdf, via the excellent LondonYIMBY.  Here is a related estimate from two days ago."

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