The Incidence of Land Use Regulations

63 Pages Posted: 19 Apr 2021

See all articles by Camilo Acosta

Camilo Acosta

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF)

CIEF Submitter

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF); Universidad EAFIT; Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF), Students

Date Written: April 16, 2021

Abstract

I study the welfare consequences of land use regulations for low- and high-skilled workers within a city. I use detailed geographic data for Cook County and Chicago in 2015-2016, together with a spatial quantitative model with two types of workers and real estate developers who face regulations. For identification, I use the 1923 Zoning Ordinance, which was the first comprehensive ordinance in Chicago. I find that an increase of 10 percentage points in the share of residential zoning in a block group, relative to block groups with more commercial zoning, leads to a 1.7% increase in housing prices, a 2.6% decrease in wages and a higher concentration of high-skilled residents. Welfare changes can be decomposed into changes in housing prices, sorting, wages and land rents. Results suggest that more mixed-use zoning and looser floor-to- area limits lead to welfare improvements, especially for low-skilled residents, and to a reduction in welfare inequality.

Keywords: zoning, FAR, skills, welfare, inequality

JEL Classification: O18, R14, R23, R31, R54

Suggested Citation

Acosta Mejia, Camilo and Submitter, Center for Research in Economics and Finance and Submitter, Center for Research in Economics and Finance, The Incidence of Land Use Regulations (April 16, 2021). Available at SSRN: https://ssrn.com/abstract=3828217 or http://dx.doi.org/10.2139/ssrn.3828217

Camilo Acosta Mejia

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF) ( email )

Carrera 49 No. 7 South - 50
Medellin
Colombia

Center for Research in Economics and Finance Submitter (Contact Author)

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF) ( email )

Carrera 49 No. 7 South - 50
Medellín
Colombia
+057 (4) 261 9500 Ext. 9532 (Phone)

HOME PAGE: http://www.eafit.edu.co/cief

Universidad EAFIT ( email )

Carrera 49 N° 7 sur – 50
Medellín, Antioquia 00000
Colombia

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF), Students ( email )

Carrera 49 No. 7 South - 50
Bogota
Colombia

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