Date/Time
Date(s) - 23/10/2024
11:30 am - 12:30 pm

Diego Daruich, Assistant Professor at the University of Southern California, Marshall School of Business, will present to our economics graduate students and faculty on Wednesday, October 23rd, 11:30am-12:30pm (EST) in KTH 334.

Diego’s research interests are in macroeconomics, labour economics, and econometrics. Diego will present the paper, “Zoning Out Opportunities: Exploring the Child Development Impact of Zoning Laws”.

Abstract
An emerging body of literature demonstrates that neighborhoods significantly impact the long-term outcomes of children. A crucial factor in designing successful neighborhood-based policy interventions is understanding the elasticity of housing supply (Chyn and Daruich, 2022). This paper investigates the effects of land restrictions on housing supply by integrating neighborhood effects into a GE overlapping-generations model. The model accounts for endogenous housing supply, neighborhood quality, location choice, and child development. Importantly, housing production is modeled as a combination of housing permits and capital, with productivity and input shares determined by local housing regulations. Less restrictive regulations are found to enhance productivity and decrease house prices (e.g., favoring developments such as apartment buildings). Households hold houses as part of their assets, and consequently, affluent households may oppose less restrictive regulations, fearing a decrease in the value of their wealth. However, loosening restrictions can make housing more affordable, facilitating greater access for children to reside in neighborhoods conducive to their future potential – a significant long-term benefit. Furthermore, the impact of housing regulation on neighborhood demographics may also influence neighborhood quality effects, thereby affecting child development outcomes of all children. Estimated using US data, the model is used to evaluate policies that reduce land restrictions in line with the observed cross-sectional variation across US cities. Preliminary results suggest that restrictive housing regulation does hinder long-run child-development and welfare. Magnitudes depend crucially on who profits directly from the housing permits production. In future steps, transition dynamics and political economy results will be obtained.

View Diego’s professional website.