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Thomas J. Nechyba is professor of economics at Duke University in Durham, North Carolina, where he also serves as director of undergraduate studies for the Department of Economics. In addition, he is a research associate at the National Bureau of Economic Research, and he serves as associate editor for the American Economic Review and the Journal of Public Economic Theory. His research and teaching focus on the field of public economics, in particular primary and secondary education, federalism and the function of local governments, and public policy issues relating to disadvantaged families.
Professor Nechyba has lectured and taught in courses at the Lincoln Institute for several years, and he recently completed a working paper based on Institute-supported research, “Prospects for Land Rent Taxes in State and Local Tax Reform.” This conversation with Joan Youngman, senior fellow and chairman of the Institute’s Department of Valuation and Taxation, explores his interest in land taxation and his research findings.
Joan Youngman: How is a land tax different from a conventional property tax?
Thomas Nechyba: It’s really a question of tax efficiency. Any tax has two effects, which economists call the income and substitution effects. The income effect of a tax is the change in the choices made by the taxpayer because payment of the tax has reduced the taxpayer’s real income. The substitution effect arises because the very existence of the tax changes the relative prices of the taxed goods, and therefore gives an incentive to taxpayers to substitute non-taxed goods for taxed goods. The income effect does not give rise to any efficiency problems; it simply implies that some resources are transferred from taxpayers to the government, and we hope the government will do something useful with the money. But, the change in behavior from the substitution effect causes an economic distortion that does not benefit anyone. That is, when the higher price of a taxed good causes me to substitute to a different non-taxed good purely because of the distorted prices, then I am worse off and the government gets no revenue. This is the source of the loss of economic efficiency from taxation, because people are worse off than they were previously, and by a larger amount than the tax collections themselves. This phenomenon is sometimes called a deadweight loss.
Once I asked my students to react to the following statement on an exam: “People hate taxes because of income effects, but economists hate taxes because of substitution effects.” One student wrote that it was undeniably true because it showed that economists aren’t people! Well, I think at least some economists are also people. However, it is true that people dislike taxes primarily because they don’t like paying money to the government. Economists especially dislike those taxes that cause greater deadweight losses, i.e., taxes that have greater substitution effects.
A land tax is a very unusual tax. It does not carry this deadweight loss because it does not give rise to a substitution effect. No one can make a decision to produce more land or less land, and the fact that land is taxed will not distort economic decisions. If we think of the price of land as the discounted present value of future land rents, a tax that reduces expected future rents will cause the price of land to drop. But the total cost of the land, which is the purchase price plus the tax, remains unchanged. Those who are considering the purchase of land therefore face the same cost before and after the tax: before the tax, they simply pay a single price up front; after the tax, they pay a lower price up front but they know they will also have to pay all the future taxes. There is no substitution effect, only an income effect for those who currently own land, because now they can sell it for less than before. Property taxes that tax both land and buildings, on the other hand, do give rise to substitution effects because they distort the cost of making improvements to the property.
A revenue-neutral shift to land value taxation would reduce other, distortionary taxes. A shift to a more efficient tax can improve economic welfare without a loss in tax collections. This much is well known. What is not well known is the magnitude of this benefit and of the cost to landowners in terms of lower land prices. Conventional wisdom predicts that a shift to an efficient land tax would increase income and output but reduce land prices. This kind of general statement isn’t much help to policy makers. If one is suggesting major changes in a tax system, policy makers need to know whether the benefits and the costs are going to be large or small. My recent Lincoln Institute working paper, “Prospects for Land Rent Taxes in State and Local Tax Reform,” constructs a model of state economies in the U.S. to help us think about the effects of such changes.
JY: How did you become interested in developing an economic model for land taxation?
TN: A few years ago, Dick Netzer, professor of economics and public administration at New York University, suggested that I look at the implications for the U.S. economy of replacing capital taxes with land value taxes. Most economists know of the Henry George Theorem and recognize that land taxation is efficient, but they associate his ideas with nineteenth-century economic thought. We assume that all the changes in the economy since then, and changes in the economic role of land, have left these ideas inapplicable to contemporary tax systems. So I was quite surprised that my model indicated that substituting a land value tax for capital taxes on a national level would not only be efficient, as expected, but would actually raise the value of many types of land. However, property taxes are state and local taxes, and the U.S. constitution places special impediments to a national property tax, so a land tax would not be possible on a national level. Further, since each state economy is different, the results of substituting land value taxes for other taxes will also vary from state to state.
JY: How can a tax on land increase land prices?
TN: In and of itself, a tax on land does not increase land prices; it actually reduces land prices, because it reduces the discounted present value of land rents. My research does not consider a land value tax in isolation, but as part of a revenue-neutral tax reform that replaces other, distortionary taxes with a land value tax. Lower taxes on capital will increase capital usage, and more intensive use of capital will raise land prices. For example, if constructing a building becomes more profitable because the tax on the building is lowered or eliminated, an investor may be willing to pay a higher price for its components, including the land.
JY: How did you go about estimating the magnitude of these effects?
TN: I developed a general equilibrium model of an economy that uses land, man-made capital and labor in production. A general equilibrium model is one that examines how changes in one kind of market affect all other markets. This model is then applied to different states, as well as to one hypothetical “average” state, to see how various tax reforms that substitute land value taxes for taxes on capital or labor would affect prices and production. The division of capital into land and man-made capital is a departure from standard analysis, which generally looks at capital as a single category.
One critical element is the elasticity of substitution among these factors; that is, the ease with which one can be substituted for another. Technically, it is the percentage change in one factor that results from a 1 percent change in the other. This is the key to efficiency gains from reducing the tax on man-made capital and on labor and increasing the tax on land. A lower tax on man-made capital will increase the use of that capital, which in turn will produce greater output and more hiring of labor. The easier it is to substitute man-made capital and labor for land, the greater the benefit from a switch to land value taxation.
JY: Where do the elasticity numbers come from?
TN: I use a range of estimates drawn from the economic literature. For example, most studies of the substitution between capital and land give elasticity estimates between 0.36 and 1.13. My paper uses the relatively conservative estimates of 0.75, 0.5 and 0.25 as high, medium and low values, and looks at the result under each assumption. This number is then adjusted to reflect the amount of land in the state devoted to farming, on the assumption that farmland is less easily substituted for capital in the production process. I also ask similar questions with regard to substitution between land and labor.
The elasticities of the actual supplies of man-made capital and labor are also crucial. If taxes on them are reduced, how much extra capital and labor will be available as a result of the increased after-tax return? Often in studies of this sort we make what is called a “small open economy assumption.” We assume that the economy we are looking at is small in relation to the rest of the world, and that capital and labor flow freely into and out of the jurisdiction. In that case, the elasticity of supply is infinite. The opposite extreme would be an economy with the equivalent of closed borders, where no capital could enter or leave. In that case the elasticity of supply would be zero. In looking at U.S. states, the small open economy assumption is not completely accurate, and zero elasticity is not accurate either. The right number is somewhere in between. Neither capital nor labor is as mobile internationally as within the U.S., and labor in particular is less mobile across state boundaries than within a state or a small region. The small open economy assumption may be appropriate in some circumstances for smaller states, but we have to introduce more complex assumptions in other cases.
JY: How does your model compute taxes on land and labor and man-made capital? This isn’t a standard classification of taxes.
TN: This is complicated, because it involves payroll taxes, federal and state corporate taxes, federal and state income taxes, property taxes, sales taxes, and so on. So the model looks at all these taxes and makes assumptions about who is paying them to estimate an overall tax rate on labor from all sources—federal, state and local. Similarly, the model estimates an overall tax rate on land and on man-made capital. This allows us to move from an illustrative example in which taxes on labor and capital are replaced by land value taxes to considering changes in real-world taxes, which of course are never based solely on labor or capital.
JY: How do you represent the shift in taxes from labor and man-made capital to land?
TN: This is a hypothetical policy experiment in the model. Suppose, for example, you wanted to eliminate all sales taxes in a revenue-neutral way, making up the lost collections through a land value tax. Sales taxes are the average state’s largest revenue source, so this shift would be quite ambitious. The model shows what would happen under various elasticities of substitution and elasticities of supply, as described above. The tables in the paper show what land tax would be necessary to maintain revenue, and the changes in capital investment and land prices that would result.
JY: How do you move from the hypothetical average state to the 50 individual states?
TN: You have to begin by asking what factors might cause states to have different experiences with land value taxation. We consider each state’s taxes, because the benefits of shifting to a more efficient system will vary according to how much current taxes distort economic choices. Some states have no income taxes. Some states tax property heavily, while others tax sales heavily. The other critical component concerns the state’s sources of income—how they are divided among land, labor and man-made capital. The Bureau of Economic Analysis reports income from various sources by state, but does not account separately for income from land. For that information we draw on the Census of Agriculture data on the amount and market value of farmland to estimate an income figure.
JY: What kinds of results did you obtain?
TN: Since taxation of land is always economically efficient, and since taxation of other factors is always economically inefficient, a shift to land taxes always increases capital, income and labor use. For the “typical” state it seems that most of the simulated tax reforms are feasible, particularly those that reduce taxes on capital. A 20 percent cut in the sales tax, for instance, requires a nearly 24 percent increase in the tax on land, while a similar cut in property taxes requires virtually no change (0.2 percent) in the tax on land. Even a complete elimination of the state and local property tax calls for only a 23 percent increase in the tax on land, while an elimination of the sales tax would require a whopping 131 percent increase. Landowners would be deeply and adversely impacted by reforms that cut the sales tax (losing up to two-thirds of their wealth under a complete elimination of the sales tax), while they would barely feel the impact of most reforms focused on the property tax. They would experience at most a 7 percent decline in their wealth under the complete elimination of the property tax, and an actual increase in their wealth for less dramatic property tax reforms.
But these results differ substantially by state. For instance, the percentage change in the tax on land required to maintain constant state and local government revenues as taxes on capital are eliminated ranges from -1.91 percent to over 104 percent. Similarly, the impact on land prices varies greatly, with prices barely declining (or even increasing) in some states while falling by as much as 85 percent in others. While the elimination of all state and local taxes on capital is therefore technically feasible in all states, it is clearly politically more feasible in some states than in others. Overall, of course, replacing distortionary taxes with nondistortionary taxes on land always brings growth in the employment of capital and labor and increases output—but the size of these impacts also varies greatly. Given that the main political hurdle to land taxation is the expected adverse impact on landowners, these results seem to indicate that, as in the case of the “typical” state, such reforms should emphasize the simultaneous reduction in taxes such as the corporate income tax or the property tax.
JY: What do you take as the central lessons of this work?
TN: Several broad lessons emerge from the analysis of a typical state. First, elasticity assumptions are crucial to the exercise of predicting the likely impact of tax reforms. Second, under elasticity assumptions that are both plausible and relatively conservative, this model predicts that some types of tax reforms are more likely to succeed than others. In particular, tax reforms that reduce taxation of capital in favor of land taxation will have more positive general welfare implications while minimizing the losses to landowners. So policy makers might consider reforming corporate income and property taxes rather than sales and personal income taxes. Third, since elasticities tend to be lower in the short run, it is likely that some of the positive gains of tax reforms that reduce distortionary taxes in favor of land taxes will emerge only with time.
The most striking lesson from simulating tax reforms for the 50 different states is how greatly results can vary depending on underlying economic conditions and current tax policies in those states. Thus, far from arriving at “the answer” regarding the impact of land tax reforms, this study suggests that such answers are likely to differ greatly depending on the context in which the reforms are undertaken. Reforms that raise the tax on land are likely to be more effective the larger the size of the reform, the higher the initial distortionary taxes in the state, and the lower the current level of state income. And, reforms are more likely to be politically feasible (in the sense of not causing great declines in land values) when they involve reductions in taxes on capital.
The idea that land value taxation is unrealistic or would drive land prices into negative numbers is based on a static view of the economy, where no one responds to tax changes by substituting one factor for another. Once you accept that behavior will change in response to taxes, that static view no longer applies. Under these fairly conservative assumptions, tax reforms that use land taxes to eliminate entire classes of distortionary taxes are economically feasible in virtually all states. This work shows that, far from being quaint or outmoded, the idea of taxing land value is quite relevant to the contemporary policy debate.
Working Paper Information: Thomas Nechyba. 2001. “Prospects for Land Rent Taxes in State and Local Tax Reform.” 70 pages. The complete paper is posted on the Lincoln Institute website at www.lincolninst.edu and may be downloaded for free.
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Una versión más actualizada de este artículo está disponible como parte del capítulo 3 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
La demanda por servicios urbanos sobrepasa la capacidad financiera de la mayoría de las ciudades del mundo. Para hacerle frente a este problema, muchos gobiernos municipales utilizan exitosamente el impuesto a la propiedad junto con otros instrumentos administrativos a fin de recaudar esos fondos tan necesarios. Actualmente El Salvador es el único país centroamericano que no impone una tributación sobre suelo y propiedad. Sin embargo, funcionarios públicos, expertos académicos y líderes empresariales del país han comenzado a discutir sobre la necesidad de establecer un sistema fiscal sobre la propiedad inmobiliaria, y las estrategias para su ejecución.
El sistema de tributación de El Salvador está caracterizado por la falta de equidad y una cantidad mínima de impuestos recaudados, lo cual afecta el nivel de inversiones públicas. Décadas de guerra civil y caos económico han dejado al país sin una tradición establecida de administración ni control fiscal. Los primeros cambios al sistema de tributación comenzaron a ponerse en práctica en 1993, cuando tanto el antiguo impuesto patrimonial sobre la propiedad personal y de la empresa (incluso sobre bienes inmuebles), como el impuesto sobre las ventas del 5 % fueron abolidos y sustituidos por un impuesto sobre las ventas del 13 por ciento. La recaudación de estos impuestos y de un impuesto sobre la renta corre a cargo del gobierno central.
El único impuesto municipal que existe es un tributo arcaico y complejo basado en actividades comerciales, industriales, financieras y de servicios. Debido a su limitada capacidad para aumentar sus ingresos, los municipios no tienen muchas oportunidades de obtener préstamos de bancos nacionales, y ninguna posibilidad de conseguirlos de instituciones financieras internacionales. Entre otros factores que contribuyen a debilitar la base financiera de los gobiernos municipales se cuentan las deficiencias administrativas, los problemas catastrales y las limitaciones del marco legal. Dado que la zona metropolitana de San Salvador abarca una gran área de este pequeño país, la tributación municipal y otros programas de planificación fiscal puestos en práctica allí tienen repercusiones significativas en todo el país.
En 1998, el Consejo Municipal de San Salvador propuso aumentar los impuestos a la actividad comercial, lo cual provocó protestas inmediatas por parte de representantes empresariales y funcionarios municipales. Los líderes de negocios denunciaron al programa tributario propuesto como un generador de costos adicionales que los forzaría a subir los precios de artículos de consumo y servicios, y posiblemente llevaría a un crecimiento de la inflación; como alternativa, demandaron incentivos para nuevos proyectos de desarrollo a cambio de modificaciones del sistema tributario. El Consejo Municipal defendió su propuesta, precisando que la estructura tributaria actual se caracterizaba por una seria falta de equidad porque castigaba a los negocios pequeños al mismo tiempo que ofrecía ventajas a los grandes.
El Consejo Municipal de San Salvador y la Cámara de Comercio e Industria de El Salvador formaron una comisión mixta para que investigara los complejos asuntos involucrados en la reforma fiscal propuesta y las precondiciones que la misma precisaría, tales como actualizaciones catastrales, marco legal y capacitación técnica. Si bien la discusión no estuvo centrada en los mecanismos concretos para llevar a cabo una tributación de suelo y propiedad, fue muy significativo que estos importantes grupos de interés coincidieran sobre la necesidad de imponer un tributo inmobiliario en el futuro.
Beneficios de una perspectiva internacional
En enero de 1999 se realizó una reunión extraordinaria de funcionarios públicos y grupos de interés privado, en la que el Instituto Lincoln y la Oficina de Planificación del Área Metropolitana de San Salvador (OPAMSS) estudiaron muchos de los asuntos pertinentes al desarrollo y ejecución de un sistema de tributación inmobiliaria. Éste fue el tercero de una serie de programas auspiciados por el Instituto diseñados con el objetivo de compartir la experiencia internacional y ayudar a desarrollar un nuevo marco de trabajo en pro de un sistema tributario con más equidad en El Salvador.
Particularmente en un país pequeño como El Salvador, la implementación de un sistema adecuado de impuestos a la propiedad puede tener efectos positivos y estratégicos no sólo sobre las finanzas municipales, sino también sobre las políticas macroeconómicas y la revaluación del sector financiero. Alven Lam, investigador del Instituto Lincoln, explicó que la reestructuración del marco tributario ha sido el factor fundamental que ha permitido a algunos países asiáticos como Japón, Tailandia e Indonesia, recuperarse de sus crisis económicas. Los recientes problemas fiscales de Brasil y el continuo debate sobre el funcionamiento del sector financiero de El Salvador agregaron un sentido de apremio a la discusión sobre el amplio contexto económico de un impuesto a la propiedad municipal.
En el seminario también se discutió la importancia de integrar una tributación mixta de suelo y propiedad como herramienta fundamental para promover un manejo eficaz de la tierra urbana. Vincent Renard, del Laboratorio Econométrico de la Escuela Politécnica de París, elogió la iniciativa del Consejo Municipal de San Salvador y de otros gobiernos municipales para modificar sus estructuras tributarias, haciendo énfasis en la importancia de no aislar dichas políticas de los mercados de bienes raíces. Asimismo, Renard criticó ciertas estrategias de planificación urbana, tales como la tendencia actual que hay en El Salvador de regularizar en exceso el uso de la tierra mediante medidas legales que están totalmente desvinculadas de la tributación de la tierra y de incentivos fiscales.
Una tercera área de preocupación durante el debate consistió en las implicaciones políticas y económicas de la tributación a la propiedad. Entre otras cosas, es crítico que los funcionarios involucrados en establecer un sistema de tributación sobre la propiedad consideren la cultura política de la sociedad, la consolidación de autonomía municipal, la transparencia de los mercados de bienes raíces, y el uso del impuesto a la propiedad como una herramienta para el desarrollo económico y social. Julio Piza, de la Universidad Externado de Bogotá, describió diferentes aplicaciones del impuesto a la propiedad en Colombia, realzando la existencia de un problema común: la dificultad de medir la base impositiva de la tierra y los bienes debido en gran parte a los obsoletos sistemas catastrales y a la falta de otros sistemas de información.
Aunque la discusión sobre la reforma fiscal en El Salvador ha sido eclipsada por las recientes elecciones nacionales, el nuevo presidente ha expresado interés en una política de tierra y tributo. Al seminario asistieron dirigentes municipales y nacionales de los sectores políticos y comerciales, quienes expresaron un interés profundo en modernizar sus programas de manejo fiscal y tributación municipal. El solo hecho de haberse reunido para discutir abiertamente estos complejos asuntos es una señal esperanzadora. Para que haya progreso, es necesario contar con la voluntad política, la participación continua de la comunidad comercial y el reconocimiento de que el impuesto constituye tanto un instrumento financiero práctico para satisfacer necesidades inmediatas como también una herramienta importante para lograr crecimiento económico y desarrollo urbano.
Al igual que otros países en estado de transición social y económica, El Salvador se enfrenta ahora al desafío de establecer estipulaciones eficaces y justas para llevar a cabo las valuaciones catastrales y la recaudación de impuestos. El proceso puede facilitarse si se comienza con una estructura de tasas simple y se van introduciendo gradualmente instrumentos más sofisticados. Otros factores tales como métodos innovadores de manejo de la tierra y la posibilidad de capturar los aumentos en el valor de la tierra son críticos para el futuro crecimiento fiscal de El Salvador.
Ingresos municipales Área Metropolitana de San Salvador, 1993
Fuentes de ingresos:
Patricia Fuentes es Subdirectora de Control de Desarrollo Urbano y Mario Lungo es el Director Ejecutivo de la Oficina de Planificación del Área Metropolitana de San Salvador (OPAMSS).
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Growing recognition of the economic and social importance of land, housing and real property markets is focusing attention on the need for good policies and good data to monitor the performance of these markets and their effects on the international economy.
Much of the impetus for addressing these issues came with the United Nations General Assembly’s unanimous endorsement in 1988 of the document Global Strategy for Shelter to the Year 2000. This report described the social and economic role of housing and called on governments to undertake enabling policies to create well-functioning land and housing markets.
Within a few years, the World Bank published its own housing policy paper, Housing: Enabling Markets to Work, which set out a stylized set of “do’s and don’ts” for housing policymakers to use in making choices about policies, regulations and institutions that influence the performance of the housing sector. Each of these documents makes it clear that the stakes of getting housing policies right are considerable, especially those policies having to do with urban land.
The Importance of the Housing Sector
Housing, together with the land under it, is the single most important asset of households in most of the world’s cities. Housing investment and the flow of housing services account for a total contribution to GNP of between 7 and 18 percent in most countries. However, these figures fail to convey fully how the performance of the housing sector is intertwined with that of the broader economy through real, financial and fiscal circuits.
Since housing comprises 15 to 35 percent of consumer spending in most countries, inflation in housing prices is a significant element of overall consumer price inflation. Housing loans comprise some 15 to 20 percent of the consolidated assets of the banking systems of the most industrialized countries, making the integrity of these loans crucial to the overall soundness of the financial sector.
Housing subsidies, particularly in formerly planned economies, have contributed to budgetary deficits which have aggravated inflationary pressures, and poorly planned housing policies have often led to limited residential and labor mobility. Even in the United Kingdom, research indicates that inappropriate housing policies have increased structural unemployment rates, increased consumer prices and interest rates, adversely affected the balance of payments, and led to a significant decline in rates of household savings. Real estate booms and busts have also become a prominent feature of urban and national economies, notably in the United States and Japan.
Given the importance of the housing sector and the high cost of policy failures, it is surprising that many countries underestimate the objectives and instruments of housing policy. As a result, housing problems are often aggravated by ill-conceived or poorly executed public policies, and the performance of the sector falls beneath its potential.
Policies Affecting Housing
The provision of infrastructure, the regulation of land and housing development, the organization of the construction and materials industry, and the involvement of the public sector in housing production all have direct bearing on the production of housing and its responsiveness to shifts in demand. But other policies are also important—for example, those that relate to the physical and legal security of renters and owners, and the ability to use housing as collateral for long-term financing.
These policies influence the desirability of, and demand for, real estate and housing as an asset and, therefore, the amount of housing that investors want to build. In turn, these policies affect the quantity and affordability of housing available to meet the needs of final consumers of housing services. Investment decisions also influence the cost, availability, quality and production of informal housing, which accommodates much of the urban population in many developing countries.
Recent data on 53 countries collected by the Housing Indicators Program, a joint program of the United Nations’ Centre for Human Settlements and the World Bank, supports the importance of policy differences in shaping housing sector outcomes. Two key types of indicators are physical measures, such as crowding or structural durability, and measures related to price, such as house values, rents and the ratio of house value to income (also called the house-price-to-income ratio), which often reflects the relative efficiency of housing markets.
Comparisons of such indicators suggest, for example, that in Thailand, where land and housing regulation is simple and efficient, housing supply is more than 30 times as responsive to shifts in demand than in either Korea or Malaysia, where regulation is complicated and cumbersome. This is reflected in striking differences in housing prices, quality and affordability among the three countries.
Enabling and Non-enabling Policies
“Enabling” countries are considered more market friendly because their housing policies support housing demand through appropriate housing finance, property rights and subsidies. Such countries facilitate housing supply by providing infrastructure, pertinent regulation and a competitive housing development industry. Figure 1 shows how a number of important housing outcomes vary with both the level of economic development (as measured by per capita income) and the policy environment for four groups of countries.
Housing prices at lower income levels among non-enablers are often the equivalent of two annual incomes higher than they are among enablers. Home ownership rates among enablers are generally 15 to 25 percentage points higher. Crowding, as measured by floor area per person, is significantly less among enablers. Residential mobility (percentage of population moving annually) is higher among enablers—a factor that facilitates upgrading housing conditions and enhancing job mobility.
A comparison of U.S. cities shows that house prices in non-enabling cities with stricter regulatory policies have risen in relative terms some 30 to 60 percent over a 15-year period (see Figure 2). This trend suggests important consequences for quality of life and competitiveness among cities with different degrees of market flexibility. Relative shifts in housing costs are in some cases equivalent to doubling potential residents’ combined federal and state income tax, creating powerful disincentives for moving and for the functioning of labor markets.
These and similar findings suggest that systematic policy mistakes have been made, that their costs have been high, and that it is time for a general change in thinking about the aims and instruments of land and housing policy.
Stephen K. Mayo, a visiting fellow of the Lincoln Institute, is developing research and education programs on land prices, land markets and the broader economy. On November 7-8, 1997, the first in a series of conferences on this topic will be held at the Institute to examine land prices and land information systems.
FYI
References
Angel, Shlomo, Stephen K. Mayo, and William Stephens. “The Housing Indicators Program: A Report on Progress and Plans for the Future,” Netherlands Journal of Housing and the Built Environment, 1993.
Malpezzi, Stephen, “House Prices, Externalities, and Regulation in U.S. Metropolitan Areas,” Journal of Housing Research 7,2, 1996.
United Nations Centre for Human Settlements. Global Strategy for Shelter to the Year 2000. United Nations, New York, 1988.
World Bank. Housing: Enabling Markets to Work. World Bank Housing Policy Paper. Washington, DC, 1993.
Figure 1 Housing Outcomes for Four Groups of Countries
Source: Based on data from 53 countries collected by the joint World Bank/UN Centre for Human Settlements Housing Indicators Program (HIP). The Enabling Index was developed using HIP data on policies, regulations and institutional arrangements.
Figure 2 Average Housing Price Changes for U.S. Cities
Source: Based on hedonic price indices for rental and owner-occupied housing (weighted by the proportion of renters and owners in each market) for U.S. Standard Metropolitan Areas. The classification of U.S. cities as enablers or non-enablers is based on an index of regulatory stringency originally developed and applied by Stephen Malpezzi.
