Residential Building Restrictions, Cost of Living, and Partisanship

Abstract

Why have richer U.S. states become more Democratic and poorer states more Republican? I find that this phenomenon actually reflects cost of living, driven by residential building restrictions. Such restrictions have come under intense scrutiny from economists in recent years. By making housing supply less responsive to price, land-use regulation increases house prices in locations that are highly desirable for either amenities or production. High house prices are the most important component of general cost of living. High cost of living deters in-migration of lower-income households, especially those that do not highly value amenities. Holding median household income constant, higher-cost locations will tend over time to attract and keep households that highly value amenities. It is hypothesized that these households will be more Democratic. Accordingly, raising residential building requirements in high-amenity areas should cause those areas to move gradually to the left. The hypotheses are tested on a variety of individual- and state-level data.

Keywords: housing supply, housing prices, zoning, land use, partisanship, migration