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Affordable Housing and CityWelfare

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Speaker: Stijn Van Nieuwerburgh – Columbia University
Event date: Tuesday, 26 February 2019 12:30 pm - 01:45 pm
Place: Faculty of Law, Economics and Finance
JFK Building
29, avenue Kennedy
L-1855 Luxembourg
Ground Floor, Nancy-Metz Room

Housing affordability has become the main policy challenge for the major cities of the world. Two key policy levers are zoning, rent control. We build a new dynamic spatial equilibrium model to evaluate the effect of these policies on house prices, rents,

residential construction, labor supply, output, income and wealth inequality, as well as the location decision of households within the city. The analysis incorporates risk, wealth effects, and dynamic spatial equilibrium. We calibrate the model to the New

York MSA, incorporating current zoning and rent control policies. Our model suggests sizable welfare gains from relaxing zoning regulations in the city center. That policy is progressive; it reduces overall inequality but increases spatial inequality between neighborhoods. In contrast, policies that decrease the size of the rent control system are welfare reducing. The concentrated losses of the poor outweigh the efficiency

gains from a better spatial allocation of labor and housing.

The same trade-off is present for a housing voucher program.

Data: Invitation_Stijn_26.02.2019.pdf 294.56 kB