
Housing Constraints and Spatial Misallocation [pdf] - MaysonL
http://eml.berkeley.edu//~moretti/growth.pdf
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MaysonL
_" Abstract

We quantify the amount of spatial misallocation of labor across US cities and
its aggregate costs. Misallocation arises because high productivity cities
like New York and the San Francisco Bay Area have adopted stringent re-
strictions to new housing supply, effectively limiting the number of workers
who have access to such high productivity. Using a spatial equilibrium model
and data from 220 metropolitan areas we find that these constraints lowered
aggregate US growth by more than 50% from 1964 to 2009."_

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pishpash
Why is New York or the San Francisco Bay Area inherently high-productivity?

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Nokinside
Urbanization causes agglomeration benefits. Larger cities with high-tech
industry get even more productivity increases.

New York (finance and business center) and Bay area (Silicon Valley) had a
good start before others and started collecting people and companies around
the country.

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Roritharr
I always wonder how big the impact of housing as an Investment Class has on
the housing market.

Without any data to back this up, I feel that much of the price inflation
around the world housing markets is due to money flowing into the housing
market that is fleeing countries, taxation or instability in general. Can
anyone more knowledgeable refute this?

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slackson
I've never understood why people assume that sort of investment is going to be
going to the housing market in particular, especially when it goes along with
complaints of absentee foreign landlords and unoccupied housing. Surely even
if you're fleeing instability you still want to make the best investments you
can, and refusing to rent property or investing in already overactive markets
rather than somewhere else is just leaving money on the ground. I could
definitely be wrong, but I suspect many people assuming otherwise have neither
data nor theory to back that up.

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Mz
_...cities like New York, San Francisco and San Jose...experienced some of the
strongest growth in labor productivity over the last five decades. These
cities also adopted land use restrictions that significantly constrained the
amount of new housing that can be built.... which has significantly reduced
the elasticity of housing supply..._

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gumby
Umm, so why doesn't the invisible hand intent people to grow elsewhere
instead?

This could be interpreted as a snide comment but it's the opposite: I strongly
believe in regulation but could someone with an Austrian-economist bent
explain why this doesn't happen?

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JBReefer
It has, huge chunks of the US have moved to the sun belt. Between 2010 and
2015, 500k people moved from New York State to Texas - more moved to Florida
etc.

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gumby
Yet those places aren't seeing the same tech boom that the Bay Area is. Texas
has tech in its economy (I have lived in Austin, and from SV have done
business with Texas tech companies) but its economy is more dependent on
extractive industries (oil/gas and ag) than California.

My point is that classical economics says that if the Bay Area becomes
overpriced (the cost of doing business exceeds benefits) then plausible
alternatives will spring up.

