On the origins of land use regulations: Theory and evidence from US metro areas

Abstract

We model residential land use constraints as the outcome of a political economy game between owners of developed and owners of undeveloped land. Land use constraints benefit the former group (via increasing property prices) but hurt the latter (via increasing development costs). More desirable locations are more developed and, as a consequence of political economy forces, more regulated. Using an IV approach that directly follows from our model we find strong and robust support for our predictions. The data provide weak or no support for alternative hypotheses whereby regulations reflect the wishes of the majority of households or efficiency motives.

Land use regulations and the value of land and housing: An intra-metropolitan analysis

“…Moreover, regulations governing the use of land have become more numerous and more onerous in recent decades, and housing has become more costly in some metropolitan areas (Glaeser and Ward, 2009;. Although there has been some recent work on the motivations behind the adoption of stringent land use regulations (Hilber and Robert-Nicoud, 2013;Kahn, 2011), these new explanations provide nuance to rather than supplanting the basic insights of decades earlier. As Hamilton (1978) and Fischel (1980) posit in what came to be called the ''homevoter hypothesis,'' municipalities, responding to voter preferences, 3 Data from CoStar on the hedonic and financial characteristics of commercial office buildings have formed the basis for several recent microeconomic analyses of US property markets (e.g., Eichholtz et al, 2010, Fuerst andMcAllister, 2011).…”

“…Within the Bay Area, there is substantial variation in the economic and geographic conditions of land parcels, not only proximity to jobs and economic conditions, but also wide variations in topography -in elevation and proximity to water, open space, and natural amenities, as well as exposure to earthquake risk. Importantly, the Bay Area is also infamous for a restrictive pattern of land use regulation and for containing some of the most land constrained Metropolitan Statistical Areas (MSAs) 4 in the United States (Hilber and Robert-Nicoud, 2013;Saiz, 2010).…”

Do political parties matter for local land use policies?

“…Developers and/or owners of undeveloped land see development as an opportunity to increase their profits (Glaeser et al, 2005a;Hilber and Robert-Nicoud, 2011). The unemployed and those employed in the construction sector and tourism industries see their possibilities of finding or retaining a job enhanced.…”

“…Yet, any empirical evidence in favor of this hypothesis is scarce (Dhering et al, 2008), suggesting the need to look elsewhere for a fuller picture. Indeed, various authors have recently provided evidence that interest groups, comprising both developers and environmentalists, might also be fairly influential (e.g., Glaeser et al, 2005a;Hilber and Robert-Nicoud, 2011;Solé-Ollé and Viladecans, 2012). The role played by pro-growth coalitions was also highlighted in Molotch's classical study (1976), in which the term 'urban growth machine' was first coined.…”

Is the Rent Too High? Aggregate Implications of Local Land-Use Regulation

“…Several authors in diverse contexts have modeled zoning as an endogenous outcome of political processes (Hamilton, 1975;Fischel, 1987;Monkkonen and Quigley, 2008;Fischel, 2009;Hilber and Robert-Nicoud, 2013;Ortalo-Magné and Prat, 2014;Hills and Schleicher, 2011;Schleicher, 2013;Hills and Schleicher, 2014;Fischel, 2015). I implement the findings of, e.g., Fischel (2009) and Hills and Schleicher (2011) that zoning laws are actively determined by highly engaged utility-maximizing households at the local level-municipalities, neighborhoods, or even direct neighbors.…”