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Housing Constraints and Spatial Misallocation

Chang-Tai Hsieh and Enrico Moretti

American Economic Journal: Macroeconomics, 2019, vol. 11, issue 2, 1-39

Abstract: 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 36 percent from 1964 to 2009.

JEL-codes: E23 J24 J31 R23 R31 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mac.20170388
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Handle: RePEc:aea:aejmac:v:11:y:2019:i:2:p:1-39