Event

The Production Function for Housing: Evidence from France

Join Laurent Gobillon for this week's Department of Economics External Seminar

  • Tue 5 Nov 19

    16:00 - 17:30

  • Colchester Campus

    Economics Common Room 5B.307

  • Event speaker

    Laurent Gobillon

  • Event type

    Lectures, talks and seminars
    Department of Economics External Seminar

  • Event organiser

    Economics, Department of

In today's seminar Laurent Gobillon, from the Paris School of Economics, discusses his paper on The Production Function for Housing: Evidence from France

Abstract: 

We propose a new non-parametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the first-order condition for profit maximisation with respect to non-land inputs by competitive house builders. 

For parcels of a given size, we compute housing production by summing across the marginal products of non-land inputs. Differences in non-land input investments are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newly-built single-family homes in France.

We find that the production function for housing is reasonably well, though not perfectly, approximated by a Cobb-Douglas function and close to constant returns after taking care of some estimation concerns. We estimate an elasticity of housing production with respect to non-land inputs of about 0.65.

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