Housing productivity and the social cost of land-use restrictions

David Albouy, Gabriel Ehrlich

Research output: Contribution to journalArticlepeer-review


We use metro-level variation in land and structural input prices to test and estimate a housing cost function with differences in local housing productivity. Both OLS and IV estimates imply that stringent regulatory and geographic restrictions substantially increase housing prices relative to land and construction input costs. The typical cost share of land is one-third, and substitution between inputs is inelastic. A disaggregated analysis of regulations finds state-level restrictions are costlier than local ones and provides a Regulatory Cost Index (RCI). Housing productivity falls with city population. Typical land-use restrictions impose costs that appear to exceed quality-of-life benefits, reducing welfare on net.

Original languageEnglish (US)
Pages (from-to)101-120
Number of pages20
JournalJournal of Urban Economics
StatePublished - Sep 2018


  • Cost function estimation
  • Economies of scale
  • Housing prices
  • Productivity
  • Quality of life
  • Regulation
  • Urbanization

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies


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