Selectivity bias in urban land value functions

Presents a two-stage model of land value and land use in which land use is determined by zoning practices. Our objective is to determine whether selectivity bias is a problem in empirical land value functions. Separate land value equations are estimated for land that is zoned for single-family residential, multi-family residential, business/commercial, and manufacturing use. Unlike previous studies, the zoning classification of a parcel of land is treated as an endogenous variable, and an equation is estimated to explain this variable. Selectivity bias is found to be a source of bias in residential but not in non-residential land value functions. -from Authors