The power of developers: evidence from California
Abstract:
The goal of this paper is to provide evidence on the influence wielded by the real estate industry on local housing policies. We study whether the representation in the city council of politicians with professions related to this industry (i.e., land developers, home builders or real estate agents) influences the number and type of building permits issued and the growth in housing prices. We focus on the case of California during the period 1995-2019. We rely on a close-elections Regression Discontinuity Design for identification. We compare the marginally winning developers with the marginally losing non-developers. We find that the entry of a developer in the city council increases the number of housing units permitted during the following four years by 65% and housing prices drop about 15%. The effect is larger for multi-family homes, less regulated places, and in councils with minorities and liberals and low transparency and turnout.
About Elisabet Viladecans-Marsal:
Elisabet Viladecans-Marsal is a Full Professor of Economics at the University of Barcelona and an associate researcher at both CEPR and CEMFI (Center for Monetary and Financial Studies). She is the recipient of the ICREA Academia 2022 award. She serves on the Board of Directors of the Urban Economics Association. Additionally, she directs the Chair in Urban Economics and leads the Cities research program at the Institut d’Economia de Barcelona. Previously, she was a pre-doctoral researcher at the University of Birmingham and has conducted regular research visits at the University of California Irvine. Her research interests include urban economics, economic geography, and public economics. She has led numerous national and international research projects and has published in top-tier academic journals. Moreover, she regularly advises local administrations and public institutions on matters related to urban economies and the design of local public policies.
Language: English
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