The effects of transport infrastructure on housing supply: the role of land-use regulation

47 Pages Posted: 9 Aug 2022 Last revised: 3 Oct 2023

See all articles by Kenzo Asahi

Kenzo Asahi

Pontificia Universidad Católica de Chile

Andrea Herrera

Pontificia Universidad Catolica de Chile

Hugo E. Silva

Pontificia Universidad Católica de Chile; Instituto Sistemas Complejos de Ingenieria (ISCI)

Date Written: August 4, 2022

Abstract

We study the impact of new transportation infrastructure on housing supply using historical and microdata from Santiago and exploiting instrumental variables. We find that subway and highway expansions increase residential floor space substantially, but when we account for land-use regulation, we see two contrasting dynamics in the city. In the wealthiest quintile, the effect is negligible for more than 95% of the blocks due to their initial stringent regulation. However, in blocks in the first four quintiles of wealth, the impact on housing supply is substantial and homogeneous concerning the initial regulation. We provide evidence that the transport infrastructure triggers regulation to become more permissive everywhere but in the wealthiest neighborhoods. We quantify how land-use regulation limits housing supply, thus restraining welfare gains from transport infrastructure improvements.

Keywords: Land regulation, zoning, urban economics, housing supply, transport infrastructure, market access

JEL Classification: R31, R42,O18

Suggested Citation

Asahi, Kenzo and Herrera, Andrea and Silva, Hugo, The effects of transport infrastructure on housing supply: the role of land-use regulation (August 4, 2022). Available at SSRN: https://ssrn.com/abstract=4181968 or http://dx.doi.org/10.2139/ssrn.4181968

Kenzo Asahi

Pontificia Universidad Católica de Chile ( email )

Avda. Vicuña Mackenna 4860
Macul, 780436
Chile

Andrea Herrera

Pontificia Universidad Catolica de Chile

Hugo Silva (Contact Author)

Pontificia Universidad Católica de Chile ( email )

Avda. Vicuña Mackenna 4860
Macul, 780436
Chile

HOME PAGE: http://https://sites.google.com/site/hugosilvam/

Instituto Sistemas Complejos de Ingenieria (ISCI) ( email )

Republica 695
Santiago
Santiago
Chile

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