Trickle-Down Housing Economics
I estimate the welfare effects of building different types of housing in the Boston metropolitan area. Both luxury and low-quality construction improve the welfare of poor households without a college degree. Low-quality construction is twice as effective but hurts rich, educated households due to negative effects on wages and amenities. Construction is worse for these households when cross-metro mobility is high, demand for amenities rises with education, and gentrification occurs at the neighborhood rather than metro level. Tripling the construction intensity in Boston would eliminate its affordability crisis, while instituting rent control would exacerbate it.
Nathanson, Charles. 2020. Trickle-Down Housing Economics.READ