A suggestion for the productivity summit. One of the fastest ways to increase productivity is to move from the country to a big city. Unfortunately, the worker doesn’t benefit from that increased productivity, it accrues to landlords in higher rent. Because supply is inelastic.

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Read Matthew Yglesias's post today! I agree that unfunded inclusionary zoning is a bad way to finance social housing, but Matt's post elides fact that IZ operates as tax on land as well as a tax on new construction. This dual character makes the politics of IZ reform tricky. 1/🧵

Very important & not widely understood point. Tbh I think this is the key thing that trips up most people who claim housing is ‘not like other goods’ when applying S&D analysis.

Somewhat related, I have always thought ‘skills shortages’ were a strange concept for this reason. At least w something like housing we can point to an objective benchmark like price > marginal cost.

We only end up with high rise in the middle ring (sometimes outer) because supply restrictions bind so tightly in centre, bidding up land values throughout the city + there is less organised resistance in these commuter suburbs.

Joining the national conversation on productivity and economic reform, today I’ve released a working paper presenting the case that zoning reform in New Zealand boosted construction sector productivity over the past decade. Read it here: papers.ssrn.com/sol3/papers.cf… /1

Truly incredible that anyone could still argue planning doesn’t restrict housing supply in the face of such clear evidence.

There was discourse last week coming out of people misinterpreting some e61 estimates of filtering effects. Those results are NOT an estimate of the impact of building more homes on rents, these are. It's the cheapest rents which fall the most!