Affordable Housing and City Welfare

Stijn Van Nieuwerburgh, Jack Favilukis and ,

No 13758, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Housing affordability is the main policy challenge for many large cities in the world. Zoning changes, rent control, housing vouchers, and tax credits are the main levers employed by policy makers. But how effective are they at combatting the affordability crisis? We build a new framework to evaluate the effect of these policies on the well-being of its citizens. It endogenizes house prices, rents, construction, labor supply, output, income and wealth inequality, as well as the location decisions of households. Its main novel features are risk, risk aversion, and incomplete risk-sharing. We calibrate the model to the New York MSA, incorporating current zoning and affordable housing policies. Housing affordability policies carry substantial insurance value but cause misallocation in labor and housing markets. Housing affordability policies that enhance access to this insurance especially for the neediest households create large net welfare gains.

Keywords: Dynamic spatial equilibrium; House prices; Affordable housing; Rent control; Zoning; Gentrification; Development; Housing vouchers; Tax credits (search for similar items in EconPapers)
JEL-codes: G11 G12 H41 H70 J61 R10 R20 R30 R40 R51 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Affordable Housing and City Welfare (2023)
Working Paper: Affordable Housing and City Welfare (2019)
Working Paper: Affordable Housing and City Welfare (2018)
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