TY  - JOUR
AU  - Favilukis, Jack
AU  - Mabille, Pierre
AU  - Van Nieuwerburgh, Stijn
TI  - Affordable Housing and City Welfare
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 25906
PY  - 2019
Y2  - May 2019
DO  - 10.3386/w25906
UR  - http://www.nber.org/papers/w25906
L1  - http://www.nber.org/papers/w25906.pdf
N1  - Author contact info:
Jack Favilukis
Sauder School of Business
University of British Columbia
Henry Angus Building 2053 Main Mall
Office 867
Vancouver, BC V6T 1Z2
Canada
E-Mail: jack.favilukis@sauder.ubc.ca

Pierre Mabille
Boulevard de Constance
INSEAD
Kaufman Management Center 
44 West 4th Street 
Fontainebleau 77300
France
E-Mail: pierre.mabille@insead.edu

Stijn Van Nieuwerburgh
Columbia University
Graduate school of Business
Uris Hall, office 809
3022 Broadway
New York, NY 10027
E-Mail: svnieuwe@gsb.columbia.edu
AB  - Housing affordability is the main policy challenge for  many large cities in the world. Zoning changes, rent control, housing vouchers, and tax credits are the main levers employed by policy makers. But how effective are they at combatting the affordability crisis? We build a new framework to evaluate the effect of these policies on the well-being of its citizens. It endogenizes house prices, rents,  construction, labor supply, output, income and wealth inequality, as well as the location decisions of households.  Its main novel features are risk, risk aversion, and incomplete risk-sharing. We calibrate the model to the New York MSA, incorporating current zoning and affordable housing policies. Housing affordability policies carry substantial insurance value but cause misallocation in labor and housing markets. Housing affordability policies that enhance access to this insurance especially for the neediest households create large net welfare gains.
ER  -