Join Laurent Gobillon for this week's Department of Economics External Seminar
16:00 - 17:30
Economics Common Room 5B.307
Lectures, talks and seminars
Department of Economics External Seminar
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
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.