Do Land Use Regulations Stifle Residential Development? Evidence from California Cities
Posted: 29 Jun 2016
Date Written: 2016
This paper estimates the extent to which the supply of new housing is restricted by land use regulations using a panel of California cities from 1970–1995. While land use regulation is found to significantly reduce residential development, estimates from fixed effects regressions are about 50–75% smaller than those from pooled regressions. Using the two-way fixed effects model, the implementation of an additional regulation is found to reduce residential permits by an average of 4%, which comes through reductions in both multifamily and single-family permits. Of the regulations measured, those categorized as zoning and general controls have the strongest effects. The partial effects of individual regulations show that while some significantly reduce development, others have a large positive impact.
Keywords: Land use regulation, Zoning, Housing supply, Housing markets, California
JEL Classification: R31, R52, R58
Suggested Citation: Suggested Citation