Land ownership has NOT produced racial hierarchy, gender inequity, underdevelopment and environmental degradation

See ‘Land Power’ and ‘The Land Trap’: The Human Story Has Many Plots: Struggles over who can own land and its wealth have driven wars and changed societies by Edward Glaeser. Excerpts:

"Mr. Albertus also argues that the struggle over land ownership has produced “racial hierarchy, gender inequity, underdevelopment and environmental degradation.” Maybe. The conquest of the Americas and the use of enslaved labor for farming was indeed catastrophic for Africans and Native Americans, but Wyoming, Utah, Colorado and Idaho were the first four states to give women the vote. Farming the Amazon is still producing “environmental destruction on a massive scale” but, as Mr. Bird’s chapter on Singapore reminds us, development can soar without land as long as there are strong property rights and accessible, excellent schools."

"But even if we accept Mr. Albertus’s view that “our lives today are determined by the choices that were made when the land shifted hands” over the past two centuries, it does not follow that shifting land around is more effective an antipoverty tool than, say, investing in education or urban sanitation. Mr. Albertus’s own work, cited by Mr. Bird, finds that “land reform actually lowered levels of human capital accumulation” in Peru and that “under certain conditions it also has the potential to stunt urbanization, wealth accumulation, and ultimately education by encouraging land reform beneficiaries to remain in the countryside and employ their children on the farm rather than migrating to urban areas where opportunities for upward mobility are greater.”" 

"Missing from both books is a serious discussion about the connection between property rights and the value and use of land. The powers of a landowner can range from the almost full sovereignty enjoyed by a mighty feudal noble to the essentially nonexistent rights I have over the protected swampland outside my window. Over the past 60 years, the nature of land ownership in the U.S. has changed because land-use regulations have increasingly limited the right to build. In 1763, William Pitt the Elder trumpeted the rights of the small English landholder: “The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail—its roof may shake—the wind may blow through it—the storm may enter—the rain may enter—but the King of England cannot enter—all his forces dare not cross the threshold of the ruined tenement.” That proud sentiment, linking freedom with land, feels increasingly untrue." 

A Second Push for Mike Lee’s Federal Land Sales

Freeing up a sliver of government holdings to build homes is a good idea. Deregulation can help.

WSJ editorial. Excerpts:

"Only up to 0.5% of federal land could be sold under his plan, none of which would be from protected areas like national parks, forests and wildlife preserves. States and cities would have the right to bid first on any auctioned land, before private developers."

"Since 2020 the Bureau of Land Management (BLM) has transferred about 550,000 acres into state, local and private hands, and there’s no sign of hallowed nature preserves being despoiled." 

"The federal government owned almost 90% of land in Nevada by 1998, some of which was unused desert abutting the glittering city. When Congress passed a law to streamline land sales to developers, it spurred a home-building boom, with no harm to grazing or hunting grounds."

"auctioning 150 square miles—less than 0.05% of BLM holdings, and a fraction of the amount Mr. Lee’s plan contemplated—could produce up to one million new homes." 

Unhinged Reactions: Federal Lands Edition

By Stephen Slivinski of Cato.

"There are a few safe bets on outrageous online reactions to proposed government policies. Unhinged hyperventilation over very modest proposals to sell federal land seems to be one of them.

A recent proposal by the Senate Committee on Energy and Natural Resources directs the Bureau of Land Management and the Forest Service to auction off a combined 1 to 1.5 percent of federally owned land to private owners for the express purpose of building new housing in 11 western states.

To see the overheated reaction from opponents, you’d think the committee was proposing to build casinos along the rim of the Grand Canyon and Olive Gardens in Yellowstone. There was pearl-grasping over the perceived acreage (“It’s equal to the size of Connecticut!”) and revulsion over transferring ownership rights of federally owned land to private owners (“This land is our birthright!”).

The proposal is indeed modest: as noted already, it’s no more than 1.5 percent of what is currently federally owned land in 11 of the 20 largest states in the US. Together, those states equal 1.7 million square miles. Tiny Connecticut amounts to 0.3 percent of that 11-state landmass.

Assuming the feds max out this allotment (which they are not required to do), there’s a rather lengthy multi-year process to sell the land, including getting approval from the state and local governments (including tribal governments if applicable) where each parcel is located. 

And that’s the big myth in all of this: these are not beautiful national parks with breathtaking vistas. This is mostly land in the hands of the Bureau of Land Management, the agency that oversees the purchase and management of land that, when the bureau was created in 1946, was described as “the land nobody wanted.”

Plus, the land has to be deemed suitable for housing development, specifically, as determined by the aforementioned process and prioritizing attributes such as being adjacent to already developed areas and having access to existing infrastructure.

This isn’t the first time such a proposal has been put forward—or, for that matter, been enacted. There’s a version of this that has already been in place in the geographic zones along the outskirts of Las Vegas for most of the past 30 years. That one was also designed specifically to increase the land available to build new housing, and, unlike this proposal, which requires the land to be sold at market price, that land was to be sold at a discount.

The author of that proposal? Well-known fire-breathing free-market radical Sen. Harry Reid (D‑NV).

Friendly reminder: Cato’s been on this case for quite some time." 

Ryan Bourne on the British growth deterioration

From Tyler Cowen.

"From the London Times (gated), he starts from my earlier MR discussion of the topic:

Yet, from a policy perspective, identifying what changed after 2008 is less interesting than what could have been done better. Cowen’s question was ignited by a British entrepreneur telling him that the UK’s planning laws explain much of the enduring prosperity gap to the United States. I agree, and think that Cowen understates the damage of nimbyism after 2008. The financial crisis headwinds made it more imperative to dismantle growth-stifling land-use barriers, which are becoming increasingly damaging with time.

Careful analysis by the LSE economists John Van Reenen and Xuyi Yang suggests the UK has a sharper deterioration in productivity growth than France or Germany because of weaker capital investment, which the financial crisis, Brexit and political uncertainty have exacerbated. We can’t undo the financial crisis or easily overturn the public’s decision on Brexit, but giving the green light to more housing, energy and infrastructure projects by liberalising land use was an obvious path to countering this investment collapse…

Prior to 2008, pharmaceuticals, chemicals, and life sciences were expanding strongly, but are increasingly hampered by land rationing and escalating rental costs, too. Savills estimated in 2020, for example, that London had 90,000 sq ft and Manchester 360,000 sq ft of suitable lab space available, compared with Boston’s 14.6 million sq ft and New York’s 1.36 million sq ft. Similar problems afflict efforts to build hyperscale data centres.

This is all worth a ponder.  Claude 3 estimates that land rent is 12-15% of British gdp, so I still would like to see a very careful decomposition done here.  I estimated the NIMBY issues accounted for about 15% of the gdp shortfall, if we relaxed NIMBY quite a bit how much upside would that create?"

Federal Land Reform: Underused Housing Affordability Tool?

By Vanessa Brown Calder of Cato.

"Throughout the pandemic, people have poured into states in the south and intermountain west, including states like Idaho, Arizona, and Utah. According to Census Bureau estimates, areas including Boise, Idaho and Salt Lake City, Utah sustained some of the highest net migration increases during the 2020–2021 period.

Figure 1. U.S. regional migration, 2020–2021, numbers in thousands

Source note: Net internal migration encompasses migration to/​from U.S. states. Net migration includes migration from abroad. California has some of the highest outbound migration of any state; this depresses net migration estimates for the West. Table A‑2: Annual Inmigration, Outmigration, Net Migration, and Movers from Abroad for Regions: 1981–2021

Following increasing in‐​migration, cities in these once‐​affordable states rapidly encountered housing affordability issues. For example, at the end of June 2022, Phoenix, Arizona and Salt Lake City, Utah had monthly mortgage payments that were up over 70 percent, year‐​over‐​year. Observed rents were up 15 percent year‐​over‐​year in the same areas (having fallen from their peak of 20–25 percent).

Various factors—including changing consumer needs, supply chain issues, labor shortages, and the like—combined with rising demand to produce rising prices. In addition, policies including restrictive zoning became newly salient in western states with burgeoning population growth.

However, there is another less‐​recognized policy issue affecting housing supply that is specific to western states: a substantial portion of the land is owned by the federal government and not developable.

For example, in Nevada, Utah, and Idaho, the federal government owns more than 80 percent, 63 percent, and 60 percent of the land.^[1] In other states like Arizona, Colorado, Wyoming, California, and Montana, the federal government owns more than one‐​third to one‐​half of available land.

Contrary to public perception, the vast majority of federal lands are not national parks, monuments, or Bureau of Indian Affairs land. Instead, a majority of federal western land is managed by the Bureau of Land Management (BLM) and U.S. Forest Service (USFS).

BLM land was once described as “land that nobody wanted” owing to the fact that homesteaders had passed over it. Today, BLM and USFS land is used for a variety of uses, including grazing, mining, recreation, and energy transmission and production.

This land is not so far from urban development that it is of no practical use, and a significant portion of lands are within city or county boundaries: previous estimates indicate that there are 217,000 acres of BLM and USFS land within Utah city boundaries, and 650,000 acres of USFS and BLM lands within one mile of Utah city borders.

Presented with a similar set of facts in the 1990s—Las Vegas, Nevada was the fastest growing metropolitan area at the time and landlocked by federal lands punctuating private property—federal legislators passed a bill that allowed local governments in the Clark County, Nevada area to nominate federal land for competitive market auction.

Figure 3. Example of typical federal land sold to private parties in the Las Vegas metro area

Source: SNPLMA: A Model for Success, Department of the Interior

The sale of federal land in the Clark County area subsequently resulted in hundreds of millions of dollars being allocated to Nevada public schools and more than a billion dollars allocated to Nevada’s trails, parks, and natural areas, creating an unusual win‐​win for Nevada developers, conservationists, and residents alike.

Earlier this year, Senator Lee and cosponsors introduced the HOUSES Act, a bill with similar objectives but more specific focus on housing development than the Southern Nevada Public Land Management Act (SNPLMA) of the ‘90s. The proposed HOUSES Act would allow local governments to nominate and purchase federal land and then develop the land for housing projects that meet certain density minimums and other criteria.^[2]

Similar to SNPLMA, proceeds from HOUSES would be made available for environmental initiatives including improvements to existing National Parks, wildfire prevention programs, public water infrastructure projects, and restoration initiatives.^[3]

But in spite of legislative efforts, the question remains: how much good could federal lands reform really do for housing affordability? This week, the U.S. Congress Joint Economic Committee (JEC) made a serious attempt to answer this question in a new report.

The JEC study first martials new figures and visuals indicating that federal land is, indeed, adjacent to many existing developed areas in western states. For example, one visual (Figure 4) highlights existing developed areas (white) and existing federal lands (both dark and light red). JEC finds that population per square mile significantly declines in many counties after accounting for federal land—what you would expect to find in places where development is constrained.

Figure 4: “Western States’ Population Centers at Night and Federal Land, 2021”

Source: The Houses Act: Addressing the National Housing Shortage by Building on Federal Land 

The authors then evaluate the effect of federal land reform on housing. They estimate buildable federal land by limiting land to BLM‐​managed land and remove all remaining land parcels containing water, marshland, or a slope greater than 15 degrees that would make development challenging. Then, using various assumptions based on the HOUSES Act, the report models how many homes could be built on eligible buildable parcels before A) the available buildable land runs out or B) the so‐​called housing “shortage” is eliminated.^[4]

JEC concludes that the HOUSES Act could significantly influence housing supply in western states. Specifically, the study finds that HOUSES reforms could lead to the construction of approximately 2.7 million homes, including 430,000 homes in San Diego County, California; 350,000 homes in Maricopa County, Arizona; 109,000 homes in Clark County, Nevada; and 55,000 new homes in Utah County, Utah alone.

As a result of this new development, the authors find that an additional 8 percent of the population in twelve western states would be able to afford an average home (a 24 percent increase from the baseline). Crucially, this increase in housing development would be possible with the conversion of just 0.1 percent of existing federal land holdings.

As the report acknowledges, federal land reform is in no way a substitute for zoning reform at the state and local government level. Moreover, the study’s estimates hinge on the implicated counties’ interest in, and use of, the proposed program: counties with strong environmental impulses may be less inclined to make use of the program.

Still, this study provides evidence that federal land reform could be a promising federal tool to improve housing supply and thereby housing affordability. This will likely come as welcome news to many western municipalities with housing markets under pressure from growth."

Land Use Regulations Are Leading To Lackluster Growth In Coastal Cities

See Why Land Use Regulations Matter by Emily Hamilton of Mercatus.

"Many American cities that offer good job opportunities are not experiencing the population growth one would expect. Their lackluster growth is largely the result of regulations that make it difficult to build in coastal cities. The regulations that limit construction include zoning laws, parking requirements, and historic preservation.

Rather than moving to where the best opportunities are, people are moving to where new housing is abundant, such as the rapidly growing Sun Belt cities of Houston and Atlanta. As Ryan Avent explains in The Gated City, “America has made its most productive locations ever less accessible. The best opportunities are found in one place, and for some reason most Americans are opting to live in another.”

The Regressive Effects of Land Use Regulations 

Rising home prices in cities with growing populations are not a law of nature. Until the 1970s, regions generally accommodated new residents by allowing new housing construction and maintaining a housing stock affordable to households with a range of incomes. And cities that allow housing construction see this same pattern today. For example, in Houston, housing supply elasticity was 0.42 percent for the period of 1996 to 2016, well above the national average of 0.17 percent. During this period, the city’s population increased by half a million people, but today the median Houston home price is $235,000. Households across a broad range of incomes can find housing in Houston that’s affordable to them.

Policies whose costs fall disproportionately on low-income people are considered regressive. For example, a sales tax on staple goods has regressive effects because people with low incomes spend a greater proportion of their incomes on such goods. If land-use regulations—including zoning, parking requirements, and aesthetic rules—increase overall housing costs, the burden of these rules falls disproportionately on low-income households that typically dedicate a higher proportion of their income to housing relative to higher-income people.

Better Neighborhoods

In addition to increasing housing prices, land-use regulations limit our freedom to live in the types of neighborhoods that meet our preferences. Land use regulations limit development density by setting minimum lot size and parking requirements and by separating residential and commercial land uses. These regulations cause less dense, walkable development relative to what we might see in a freer market.

Land use regulations create a mismatch between the amount of housing available in walkable neighborhoods and the number of people who would like to live in these neighborhoods. Homes in walkable neighborhoods cost up to 14 percent more than homes in non-walkable neighborhoods. Land use regulations that limit walkable development make consumers worse off by artificially limiting the supply of walkable development and increasing home prices in walkable neighborhoods
.
Preemption as a Way Forward

At the local level, the incentives are strong to maintain existing regulations. Regulations privilege cities’ existing homeowners at the expense of people who would like to move in, but can’t due to supply constraints. Incumbent policymakers face incentives to keep the voters who elected them happy rather than creating opportunities for new people to enter their jurisdictions.

State-level preemption of local land-use rules has potential to reduce the burden of land use regulations. State policymakers have a broader geographical constituency than their local counterparts, and they are further removed from opposition to development at the local level. State rules that limit the extent to which local governments restrict development could increase housing supply and affordability in the country’s most productive cities.

California is currently exploring preemption as a way to solve their affordable housing crisis. As my colleague Salim Furth and I recently discussed on a podcast with the Pacific Research Institute (and in a forthcoming episode of the Mercatus Policy Download), California’s efforts could be a model for other states who hope to positively reform their own local land-use regulations."

Zoning Increases the Price of Housing in Australia by a Lot

By Alex Tabarrok.

"Researchers at the Reserve Bank of Australia estimate that house prices in major Australian cities are pushed well above the cost of production, including the land, by zoning regulations such as floor space index (video link) restrictions.

Zoning regulations provide benefits, but they also restrict housing supply and hence raise prices. This paper quantifies their importance by comparing prices to the marginal costs of supply at different points in time. For detached houses, marginal costs comprise the dwelling structure and the land that other home owners need to forego. Relative to our estimates of these costs, we find that, as of 2016, zoning raised detached house prices 73 per cent above marginal costs in Sydney, 69 per cent in Melbourne, 42 per cent in Brisbane and 54 per cent in Perth. Zoning has also raised the price of apartments well above the marginal cost of supply, especially in Sydney. We emphasise that this is not the amount that housing prices would fall in the absence of zoning. The effect of zoning has increased dramatically over the past two decades, likely due to existing restrictions binding more tightly as demand has risen."

If California rolled back its land rules to where they stood in 1980 U.S. gross domestic product could permanently increase by about 2%-If every state rolled back land regulations to 1980 levels, GDP could rise by as much as $1.8 trillion

See What in the Sam Hill Are Cows Doing on Sand Hill Road?: They’re eating the priciest grass in America, thanks to California’s out-of-control land-use rules by Lee E. Ohanian and Edward C. Prescott. Excerpts: 

"Land regulations have run amok, and not only in Menlo Park. In addition to governing how private property can be used, these rules implicitly dictate which special-interest groups have a say in commercial and residential development. Building proposals bring dozens of vested interests out of the woodwork, ranging from environmentalists, to “not in my backyard” homeowners, to affordable-housing lobbyists.

The question is what this costs the larger economy. Many theories have been raised to explain why the U.S. has been plagued by weak growth, which began even before the 2008 financial crisis. But as much as 40% of the slowdown may be due to increasingly severe land regulations, according to our research, conducted with economist Kyle Herkenhoff at the University of Minnesota.

Land regulations add friction to the economy in that they impede the flow of workers and capital from regions with poor job opportunities to places with good ones. Interstate migration rates used to be high. Between 1950 and 1980, California’s population increased from a little over 10 million to nearly 24 million, and its share of the national population rose from about 7% to 10%. This growth reflected a bounty of new economic opportunities that created millions of high-wage jobs in industries ranging from technology and aerospace to high-skilled manufacturing and financial services.

California’s boom was facilitated by exceptionally good state and local economic policies, which in turn reflected a bipartisan understanding that the public’s interest was served by government that helped, not hindered, development. In the 1950s and 1960s, capital spending accounted for as much as 20% of the state budget. California built schools, roads and water systems to support its population growth. These public-private synergies made California into the most populous state in the country, and the second most productive, behind only New York.

Despite rapid growth, housing remained relatively affordable. In 1970 California’s home prices were about 36% higher than the national average. But that changed as tightening land regulations began to constrain development. By 1990 California housing was 147% more expensive than the nation overall.

These regulations have damaged California and the national economy. Stratospheric home prices have redirected millions of workers away from the Golden State’s highly productive industries to states with more permissive land regulations and lower housing costs, but also with fewer high-paying jobs."

"If California rolled back its land rules to where they stood in 1980, our research estimates that the state’s population could ultimately grow to 18% of the country. U.S. gross domestic product could permanently increase by about 2%, or $375 billion. If every state rolled back land regulations to 1980 levels, GDP could rise by as much as $1.8 trillion."

Deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels

See Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown by Kyle F. Herkenhoff, Lee E. Ohanian, Edward C. Prescott. Here is the abstract:

"This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, accounts for much of these gains."

Ed Glaeser makes the case for housing deregulation

See Build, Baby, Build by Bryan Caplan of EconLog.

"Ed Glaeser makes the case for housing deregulation for Brookings:

Housing advocates often discuss affordability, which is defined by linking the cost of living to incomes. But the regulatory approach on housing should compare housing prices to the Minimum Profitable Construction Cost, or MPPC. An unfettered construction market won't magically reduce the price of purchasing lumber or plumbing. The best price outcome possible, without subsidies, is that prices hew more closely to the physical cost of building.

In a recent paper with Joseph Gyourko, we characterize the distribution of  prices relative to Minimum Profitable Construction Costs across the U.S... We base our estimates on an "economy" quality home, and assume that builders in an unregulated market should expect to earn 17 percent over this purely physical cost of construction, which would have to cover other soft costs of construction including land assembly.

We then compare these construction costs with the distribution of self-assessed housing values in the American Housing Survey. The distribution of price to MPPC ratios shows a nation of extremes.  Fully, 40 percent of the American Housing Survey homes are valued at 75 percent or less of their Minimum Profitable Production Cost... Another 33 percent of homes are valued at between 75 percent and 125 percent of construction costs.
[...]
But most productive parts of America are unaffordable. The National Association of Realtors data shows median sales prices over $1,000,000 in the San Jose metropolitan area and over $500,000 in Los Angeles. One tenth of American homes in 2013 were valued at more than double Minimum Profitable Production Costs, and assuredly the share is much higher today. In 2005, at the height of the boom, almost 30 percent of American homes were valued at more than twice production costs. 

We should blame the government, especially local government:

How do we know that high housing costs have anything to do with artificial restrictions on supply? Perhaps the most compelling argument uses the tools of Economics 101. If demand alone drove prices, then we should expect to see places that have high costs also have high levels of construction.

The reverse is true.  Places that are expensive don't build a lot and places that build a lot aren't expensive. San Francisco and urban Honolulu have the highest ratios of prices to construction costs in our data, and these areas permitted little housing between 2000 and 2013. In our sample, Las Vegas was the biggest builder and it emerged from the crisis with home values far below construction costs.

The top alternate theory is wrong:

The primary alternative to the view that regulation is responsible for limiting supply and boosting prices is that some areas have a natural shortage of land.

Albert Saiz's (2011) work on geography and housing supply shows that where geography, like water and hills, constrains building, prices are higher.   He also finds that measures of housing regulation predict less building and higher prices.

But lack of land can't be the whole story. Many expensive parts of America, like Middlesex County Massachusetts, have modest density levels and low levels of construction. Other areas, like Harris County, Texas, have higher density levels, higher construction rates and lower prices...

If land scarcity was the whole story, then we should expect houses on large lots to be extremely expensive in America's high priced metropolitan areas. Yet typically, the willingness to pay for an extra acre of land is low, even in high cost areas. We should also expect apartments to cost roughly the cost of adding an extra story to a high-rise building, since growing up doesn't require more land. Typically, Manhattan apartments are sold for far more than the engineering cost of growing up, which implies the power of regulatory constraints (Glaeser, Gyourko and Saks, 2005).

Which regulations are doing the damage?  It's complicated:

Naturally, there are also a host of papers, including Glaeser and Ward (2009), showing the correlation between different types of rules and either reductions in new construction or increases in prices or both. The problem with empirical work any particular land use control is that there are so many ways to say no to new construction. Since the rules usually go together, it is almost impossible to identify the impact of any particular land use control. Moreover, eliminating one rule is unlikely to make much difference, since anti-growth communities would easily find ways to block construction in other ways.

Functionalists are wrong, as usual:

Empirically, there is also little evidence that these land use controls correct for real externalities. For example, if people really value the lower density levels that land use controls create, then we should expect to see much higher prices in communities with lower density levels, holding distance to the city center fixed. We do not (Glaeser and War, 2010). Our attempt to assess the total externalities generated by building in Manhattan found that they were tiny relative to the implicit tax on building created by land use controls (Glaeser, Gyourko and Saks, 2005).

What's to be done?  State governments are our least-desperate hope:

The right strategy is to start in the middle. States do have the ability to rewrite local land use powers, and state leaders are more likely to perceive the downsides of over regulating new construction. Some state policies, like Masschusetts Chapter 40B, 40R and 40S, explicitly attempt to check local land use controls. In New Jersey, the state Supreme Court fought against restrictive local zoning rules in the Mount Laurel decision.  If states do want to reform local land use controls, they might start with a serious cost benefit analysis and then require localities to refrain from any new regulations without first performing cost-benefit analyses of their own.

It will be a great day when constructing new housing regulations is as big a bureaucratic nightmare as constructing new housing is now!"

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."

Today’s public policies exacerbate our differences-The evidence that land-use regulations harm potential migrants keeps piling up

By Adam Millsap of Mercatus.

"The evidence that land-use regulations harm potential migrants keeps piling up. A recent paper in the Journal of Urban Economics finds that young workers (age 22 – 26) of average ability who enter the labor force in a large city (metropolitan areas with a population > 1.5 million) earn a wage premium equal 22.9% after 5 years.

The author also finds that high-ability workers experience additional wage growth in large cities but not in small cities or rural areas. This leads to high-ability workers sorting themselves into large cities and contributes an additional 3.2% to the urban wage-growth premium.

These findings are consistent with several other papers that have analyzed the urban wage premium. Potential causes of the wage premium are faster human capital accumulation in denser, more populated places due to knowledge spillovers and more efficient labor markets that better match employers and employees.

The high cost of housing in San Francisco, D.C., New York and dozens of other cities is preventing many young people from earning more money and improving their lives. City officials and residents need to strike a better balance between maintaining the “charm” of their neighborhoods and affordability. This means less regulation and more building.

City vs. rural is only one of the many dichotomies pundits have been discussing since the 2016 election. Some of the other versions of “two Americas” are educated vs. non-educated, white collar vs. blue collar, and rich vs. poor. We can debate how much these differences matter, but to the extent that they are an issue for the country our public policies have reinforced the barriers that allow them to persist.

Occupational licensing makes it more difficult for blue-collar manufacturing workers to transition to middle-class service sector jobs. Federal loan subsidies have made four-year colleges artificially cheap to the detriment of people with only a high school education. Restrictive zoning has made it too expensive for many people to move to places with the best labor markets. And once you’re in a city, unless you’re in one of the best neighborhoods your fellow citizens often keep employers and providers of much needed consumer staples like Wal-Mart out, while using eminent domain to build their next playground.

Over time people have sorted themselves into different groups and then erected barriers to keep others out. Communities do it with land-use regulations, occupations do it with licensing and established firms do it with regulatory capture. If we want a more prosperous America that de-emphasizes our differences and provides people of all backgrounds with opportunity we need more “live and let live” and less “my way or the highway”."

Why Isn't Rent in Tokyo Out of Control?-Tokyo has a laissez-faire approach to land use

By Alex Tabarrok.

"Tokyo, Japan’s capital city, has a growing population of over 13 million people, but house prices have hardly increased in twenty years. Why? Tokyo has a laissez-faire approach to land use that allows lots of construction, subject to only a few general national regulations.

Robin Harding at the Financial Times has a very important piece on the Tokyo system:

Here is a startling fact: in 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).
Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged.
This is not the result of a falling population. Japan has experienced the same “return to the city” wave as other nations.

How is this possible?

First, Japan has a history of strong property rights in land:

Subject to the zoning rules, the rights of landowners are strong. In fact, Japan’s constitution declares that “the right to own or to hold property is inviolable.”

A private developer cannot make you sell land; a local government cannot stop you using it. If you want to build a mock-Gothic castle faced in pink seashells, that is your business.

But this alone cannot explain everything, because there was a huge property price-boom in Japan circa 1986 to 1991. In fact, it was in dealing with the collapse of that boom that Japan cleaned up its system, reducing regulation and speeding the permit approval process.

In the 1990s, the government relaxed development rules, culminating in the Urban Renaissance Law of 2002, which made it easier to rezone land. Office sites were repurposed for new housing.
“To help the economy recover from the bubble, the country eased regulation on urban development,” says Ichikawa. “If it hadn’t been for the bubble, Tokyo would be in the same situation as London or San Francisco.”
Hallways and public areas were excluded from the calculated size of apartment buildings, letting them grow much higher within existing zoning, while a proposal now under debate would allow owners to rebuild bigger if they knock down blocks built to old earthquake standards.

Rising housing prices are not an inevitable consequence of growth and fixed land supply — high and rising housing prices are the result of policy choices to restrict land development.

The policy choices were made — they can be unmade."

Land Everywhere and Not a Place to Live

By Alex Tabarrok of Marginal Revolution.

"Land use regulations raise prices, reduce mobility and increase income inequality in the United States. In many parts of the developing world, however, the situation is worse, much worse.

In an excellent piece Shanu Athiparambath writes:

Land is not scarce in Delhi, as I learned in one of those days, when a friend drove me around the city. There is enough land for everybody to live in a mansion. Delhi has nearly 20,000 parks and gardens. Large tracts of land remain idle or underutilized, either because the government owns it, or because property titles are weak. Politicians and senior bureaucrats live in mansions with vast, manicured lawns in the core of the city. Some of these political eminentoes farm on valuable urban land while firms and households move to the periphery or satellite cities where real estate prices are lower. So the average commute is long, roads are too congested, and Delhi is one of the most polluted cities in the world.

Zoning regulations inflict great harm. But it is difficult for Americans to imagine the cost of zoning in Indian cities. Delhi is one of the most crowded cities in the world, and there is great demand for floor space. But real estate developers are not allowed to build tall buildings. In Delhi, for apartment buildings, the regulated Floor Area Ratio (FAR) is usually 2. FAR, an urban planning concept, is the ratio of built-out floor space to the area of the plot.

This means, in Delhi, developers are not allowed to build more than 2,000 square feet of floor space on a 1,000 square feet plot. If a building stands on the whole plot, this would be a two-storey building.

To understand the harm this inflicts on the world’s second-most populous city, remember that in Midtown Manhattan, FAR can go up to 15. In Los Angeles, it can get as high as 13, and in Chicago, up to 12. In Hong Kong’s downtown, the highest FAR is 12, in Bahrain it is 17, and in Singapore it can get as high as 25. Not surprisingly, office space in Delhi’s downtown is among the most expensive in the world. It is impossible to profitably redevelop these crumbling buildings in Delhi’s downtown because they are under rent control.

You might expect the capital city to be especially restrictive, just as is Washington, DC, but in Mumbai, the densest major city in the world, the downtown FAR is an absurdly low 1.33.
Think about it like this: A FAR is like a tax on manufacturing land. Why would you impose prohibitive taxes in places where land is most desperately needed?"