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Title: House Size and Household Size: The Distributional Effects of the Minimum Lot Size Regulation
Citation Type: Miscellaneous
Publication Year: 2022
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Abstract: What are the distributional effects of the minimum lot size (MLS) regulation on household welfare? An overlooked channel is how the MLS regulation increases physical house size. Using synthetic control methods, I show Houston's reduction of the MLS in 1999 led to a 12% decrease in the size of new housing and a 14% increase in the marginal cost of house size. To quantify the distributional welfare effects stemming from these incentives, I build a quantitative model with housing and demographics and show that the observed price changes induced by reductions of the MLS disproportionately help lower income and smaller households. Specifically, I find that the bottom decile of households (in terms of household size and income) gain about $25,000 more (in 2010 dollars) than the top decile from a reduction in the MLS. Finally, I show that the model's predicted locational selection of households by household size and income is consistent with empirical observations in Houston before and after the change in regulation.
Url: http://mikemei.com/uploads/1/3/7/2/137207430/mei_mike_2022_jmp.pdf
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Authors: Mei, Mike
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Data Collections: IPUMS USA, IPUMS CPS
Topics: Housing and Segregation, Land Use/Urban Organization
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