Salle 3001

Diego DARUICH (University of Southern California (Marshall)) “Zoning Out Opportunities: Exploring the Child Development Impact of Zoning Laws”

Abstract:

An emerging body of literature demonstrates that neighborhoods significantly impact the long-term outcomes of children. A crucial factor in designing successful neighborhood-based policy interventions is understanding the elasticity of housing supply Chyn-Daruich (Forthcoming). This paper investigates the effects of housing supply restrictions by integrating neighborhood effects into a GE overlapping-generations model. The model accounts for endogenous housing supply, neighborhood quality, location choice, and child development.

Importantly, housing production requires paying construction taxes that are increasing in the produced amount — and such convexity is determined by local housing regulations. Less restrictive regulations enhance supply and decrease house prices (e.g., favoring developments such as apartment buildings). Households hold houses as part of their assets, and consequently, rich households may oppose less restrictive regulations as this decreases the value of their wealth — a short-term loss. However, loosening restrictions can make housing more affordable, facilitating greater access for children to reside in neighborhoods conducive to their future potential — a long-term benefit. Furthermore, the impact of housing regulation on neighborhood demographics may also influence neighborhood quality effects, thereby affecting child development outcomes of all children.

Estimated using US data, the model is used to evaluate policies that reduce housing supply restrictions in line with the observed cross-sectional variation across US cities. Preliminary results suggest that restrictive housing regulation does hinder long-run child-development and welfare. In future steps, transition dynamics and political economy results will be obtained.

Organizer : Suzanne BELLUE