Local Economic Conditions and the Nature of New Housing Supply

Christian Hilber, Jan Rouwendal and Wouter Vermeulen
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Wouter Vermeulen: CPB Netherlands Bureau for Economic Policy Analysis, The Hague, the Netherlands

No 14-120/VIII, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

Keywords: Local economic conditions; open monocentric city model; land conversion; housing supply; housing type; housing consumption; land use regulation; migration (search for similar items in EconPapers)
JEL-codes: R11 R21 R31 R52 (search for similar items in EconPapers)
Date: 2014-09-02
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Local economic conditions and the nature of new housing supply (2021)
Working Paper: Local economic conditions and the nature of new housing supply (2020)
Working Paper: Local Economic Conditions and the Nature of New Housing Supply (2014)
Working Paper: Local economic conditions and the nature of new housing supply (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20140120

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