FREQUENT readers will be well aware of my (let's not say
obsession with) attention to the relationship between land-use
restrictions and housing costs and the impact of that dynamic on
productivity and innovation. Infrequent readers can visit this
post for a taste of the argument. Given my interest in this
area, I was (let's not say overjoyed) intrigued at the arrival
of this new NBER working paper, entitled "Metropolitan land
values and housing productivity" in my inbox. Best news: the
paper provides more evidence in favour of my general hypothesis.
The authors, David Albouy and Gabriel Ehrlich, put together an
index of housing productivity, which measures how successfully
different metropolitan areas turn the inputs into housing (land,
materials, and labour) into places for people to live. Cities in
which the gap between input costs and housing costs is low are
productive in housing while those with a large gap are housing
unproductive. Unsurprisingly, productivity is negatively
correlated with geographic