Large income disparities. Fiscal imbalances. Sluggish long-run economic growth. Just a few of the economic challenges that more sensible land use regulations can help to address.
We’ve written before about a recent working paper from Peter Ganong and Daniel Shoag. Their work suggests that tighter land use regulations played a role in the end of regional income convergence in the United States (great visualization here). In a recent post for The New York Times Economix blog, Binyamin Appelbaum took up the Ganong & Shoag paper as well:
The implication is that productivity and incomes (along with tax revenues) would be higher if people were freer to locate in the most productive areas.
Though regulatory barriers to urban development may hamper potential output growth in the U.S., Ryan Avent points out that the burden from barriers in European cities is even larger — a fact that helps to explain transatlantic differences in productivity. From The Economist’s October 13 Free Exchange column:
No one expects Frankfurt to adopt Houston’s regulatory regime wholesale, but even marginal reforms to land use regulations offer a path to higher potential output in Europe and the United States. And by expanding the supply of housing in the most productive cities, such reforms would make housing more affordable for many of the families who are currently priced out.