Residential Zoning Regulations and Wealth Inequality

Joe LaBriola , University of California, Berkeley

In the United States, the last fifty years has seen the spread of municipal-level residential land use regulations that modify how land is `zoned' for residential development so as to slow residential growth. The vast majority of studies have found that these zoning regulations lead to higher housing prices and less new construction. In this paper, I investigate whether these zoning regulations also lead to greater wealth inequality between homeowners and non-homeowners. I hypothesize that residential zoning regulations increase homeowners' wealth via housing value appreciation, and reduce non-homeowners' wealth via higher rental prices and decreased ability to transition to homeownership. Furthermore, because Blacks are less likely to be homeowners than are Whites, I hypothesize that these zoning regulations exacerbate Black-White wealth inequality. I test these hypotheses using nationally-representative longitudinal data on municipal-level residential land use regulations and restricted access geocoded data from the Panel Study of Income Dynamics.

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 Presented in Session 8. Economy, Labor Force, Education, & Inequality