Essays in Urban Economics

Chapter 1 examines how land use regulation affects residential segregation by income. Residential segregation by income severely limits access to opportunity for low-income households, restricting prospects of upward mobility. Land use regulations are one potential determinant of such segregation. However, establishing a causal link between such regulation and segregation faces two econometric challenges. First, regulation is potentially endogenous. Second, proper measurement of segregation is difficult. Concerning the first challenge, the prior literature relies on instrumental variables that may not be valid. Concerning the second challenge, the prior literature relies on measures that ignore the spatial dimension of segregation. This paper uses a new instrumental variable strategy and measures of segregation that account for the spatial distribution of neighborhoods within US metropolitan areas. The key findings are that stricter overall land use regulation decreases segregation within metropolitan areas and that accounting for the spatial aspect of segregation matters. However, the negative effect appears to be driven by state involvement and approval delay; other types of regulation, such as residential density restrictions and local zoning approval complexity, may increase segregation. Chapter 2 examines how property tax assessment caps affect new home building permits and housing stock growth using county-level panel data from the US Census Bureau and longitudinal state-level tax policy data from the Lincoln Institute of Land Policy. Property tax assessment growth limits ensure smaller, more predictable changes in taxable value of property, reducing the share of property taxes on rapidly appreciating property. This helps cash-poor homeowners keep appreciating homes if tax rates don’t rise. However, these limits distort decisions on whether to move, whether to invest in property, and where to locate by conditioning reassessment on changes in property ownership, use, size, or zoning. This paper constructs a county-level panel dataset for a fixed effects regression analysis to estimate how homestead property tax assessment caps affect new homebuilding. The findings are inconclusive. Results using a levels regression are consistent with homestead assessment caps increasing homebuilding by reducing the expected future tax costs of owner-occupied housing assets. When the dependent variable is the inverse hyperbolic sine of the number of new housing units issued building permits, results are consistent with assessment caps decreasing homebuilding by increasing the tax cost of property changes