Housing, Urban Growth and Inequalities: The Limits to Deregulation and Upzoning in Reducing Economic and Spatial Inequality

31 Pages Posted: 7 May 2019

See all articles by Andrés Rodríguez-Pose

Andrés Rodríguez-Pose

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Michael Storper

London School of Economics & Political Science (LSE)

Date Written: May 2019

Abstract

Urban economics and branches of mainstream economics - what we call the "housing as opportunity" school of thought - have been arguing that shortages of affordable housing in dense agglomerations represent a fundamental barrier for economic development. Housing shortages are considered to limit migration into thriving cities, curtailing their expansion potential, generating rising social and spatial inequalities, and inhibiting national growth. According to this dominant view within economics, relaxing zoning and other planning regulations in the most prosperous cities is crucial to unleash the economic potential of cities and nations and to facilitate within-country migration. In this article, we contend that the bulk of the claims of the housing as opportunity approach are fundamentally flawed and lead to simplistic and misguided policy recommendations. We posit that there is no clear and uncontroversial evidence that housing regulation is a principal source of differences in home availability or prices across cities. Blanket changes in zoning are unlikely to increase domestic migration or to increase affordability for lower-income households in prosperous regions. They would, however, increase gentrification within prosperous regions and would not appreciably decrease income inequality. In contrast to the housing models, we argue the basic motors of all these features of the economy are the current geography of employment, wages and skills.

Keywords: cities, Economic Growth, Housing, inequality, migration, regulation, urban planning

JEL Classification: D63, O18, R21, R23, R31

Suggested Citation

Rodríguez-Pose, Andrés and Storper, Michael, Housing, Urban Growth and Inequalities: The Limits to Deregulation and Upzoning in Reducing Economic and Spatial Inequality (May 2019). CEPR Discussion Paper No. DP13713, Available at SSRN: https://ssrn.com/abstract=3383971

Andrés Rodríguez-Pose (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Michael Storper

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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