nach oben

Erschienen in:

2018 | OriginalPaper | Buchkapitel

Land, Housing, Growth and Inequality

verfasst von : Luigi Bonatti

Erschienen in: Getting Globalization Right

Verlag: Springer International Publishing

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This paper incorporates productive assets, residential land and residential structures in a growth model with two social classes: capitalists, who invest in productive assets and housing but do not work, and workers, who invest only in housing and decide on their labor effort. It is shown that the relative price of land grows in the long run at the same rate as the economy’s GDP, while the quantity of housing services and their price grow slower than it. Moreover, numerical examples show that (i) shifting taxation away from income and towards the property of land enhances long-term GDP growth and leads in the long-run to more equalitarian (more favorable to workers) income and wealth distributions, (ii) a marginal increase in the fraction of investment expenditures in residential structures that is tax deductible reduces income and wealth inequality, (iii) a change in preferences giving more weight in the utility function to residential services leads in the long run to a distribution of income and wealth more favorable to capitalists, (iv) changes in taxation or in preferences increasing the fraction of total investment devoted to the accumulation of residential wealth rather than to the accumulation of productive assets brings about a balanced growth path characterized by a higher wealth-income ratio. Finally, endogenous fluctuations may be generated along the equilibrium trajectory converging to the balanced growth path, in a model where housing wealth and residential land are distinguished from productive capital and only fundamentals (initial endowments, preferences and technologies) drive the economy.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel On the Sources of Political Discontent in Europe

Nächstes Kapitel Globalization and National Income Inequality: Observations and Lessons from the U.S. Experience

Nur mit Berechtigung zugänglich

The hypothesis that the increase in the value of residential land that has driven up house prices displaces productive investment was explored by Stiglitz (2015b).

Phelps (1994) models economies in which a rise of the ratio between wealth per worker and wage depresses employment through its effects on labor supply. Blanchflower and Oswald (2013) document the positive link between home ownership in a geographical area and subsequent high unemployment in that area, suggesting that higher levels of home ownership reduce mobility, increase commuting times and reduce rates of business formation.

As argued by the so-called ‘new economic geography’, “firms agglomerate to benefit from ‘Marshallian externalities’ such as the spreading of knowledge among similar industries, a greater pool of labour to choose from or the ability to access indivisible goods such as conference venues or airports. Hence, when operating within proximity of each other, firms can save on transaction costs and enjoy greater productivity.” (Békés and Ottaviano 2016, p. 29).

For a recent survey of the literature on housing in macroeconomics see Piazzesi and Schneider (2016).

Notice that land’s net share of income is particularly large because land does not depreciate (all its income is net), while residential structures depreciate at a much lower rate than productive capital.

This classical dichotomy can be microfounded by assuming “that capitalists are on a corner of their labor supply decision due to their wealth, leisure being a normal good” (Judd 1985, p. 84), and that workers do not find valuable to invest in productive assets because of the information, agency and transaction costs associated with holding small amount of them.

In distinguishing between productive assets and residential assets, I follow Davis and Heathcote (2005).

Consistently with this formal set-up, one can interpret technological progress as labor augmenting.

This amounts to say that technological progress is endogenous to the economy, although it is an unintended by-products of firms’ capital investment rather than the result of purposive R&D efforts.

Given these parameter values, one has: E* = 0.33; V* = 16.881; F* = 0.1726, and \( {\mathrm{L}}_{\mathrm{w}}^{*} \) = 1.350.

For optimality, the representative worker must also satisfy the transversality conditions \( \mathop { \lim }\nolimits_{{{\mathrm{t}} \to \infty }} \rho_{\mathrm{w}}^{\mathrm{t}} {\mathrm{Q}}_{\mathrm{t}} {\mathrm{L}}_{\mathrm{wt}} \lambda_{\mathrm{wt}} = 0 \) and \( \mathop { \lim }\nolimits_{{{\mathrm{t}} \to \infty }} \rho_{\mathrm{w}}^{\mathrm{t}} {\mathrm{H}}_{\mathrm{wt}} \lambda_{\mathrm{wt}} = 0 \).

For optimality, the representative capitalist must also satisfy the transversality conditions \( \mathop { \lim }\nolimits_{{{\mathrm{t}} \to \infty }} \rho_{\mathrm{c}}^{\mathrm{t}} {\mathrm{Q}}_{\mathrm{t}} ( {\mathrm{L}} - {\mathrm{nL}}_{\mathrm{wt}} )\lambda_{\mathrm{ct}} = 0 \), \( \mathop { \lim }\nolimits_{{{\mathrm{t}} \to \infty }} \rho_{\mathrm{c}}^{\mathrm{t}} {\mathrm{H}}_{\mathrm{ct}} \lambda_{\mathrm{ct}} = 0 \) and \( \mathop { \lim }\nolimits_{{{\mathrm{t}} \to \infty }} \rho_{\mathrm{c}}^{\mathrm{t}} {\mathrm{K}}_{\mathrm{t}} \lambda_{\mathrm{ct}} = 0 \).

Auerbach, A. J., & Hasset, K. (2015). Capital taxation in the 21st century. NBER Working Paper Series No. 20871.

Barro, R. J., & Sala-i-Martin, X. (1995). Economic growth. New York: McGraw-Hill.

Békés, G., & Ottaviano Gianmarco, I. P. (2016). Micro-founded measurement of regional competitiveness in Europe. In C. Altomonte & G. Békés (Eds.), Measuring competitiveness in Europe: Resource allocation, granularity and trade. Brussels, Bruegel Blueprint Series (Vol. XVIV, pp. 26–50).

Blanchflower, D. G., & Oswald, A. J. (2013). Does high home-ownership impair the labor market? NBER Working Paper No. 19079.

Bonnet, O., Bono, P.-H., Chapelle, G., & Wasmer, É. (2014). Does housing capital contribute to inequality? A comment on Thomas Piketty’s capital in the 21st century. Sciences Po-Department of Economics, Discussion Paper 2014-07.

Borri, N., & Reichlin, P. (2016). The housing cost disease, mimeo.

Calvo, G., Kotlikoff, L. J., & Rodriguez, C. A. (1979). The incidence of a tax on pure rent: A new (?) reason to an old answer. Journal of Political Economy, 87, 869–874.CrossRef

Cho (Stanley), S.-W., & Francis, J. L. (2011). Tax treatment of owner occupied housing and wealth inequality. Journal of Macroeconomics, 33, 42–60.

Davis, M. A., & Heathcote, J. (2005). Housing and the business cycle. International Economic Review, 46, 751–788.CrossRef

Davis, M. A., & Heathcote, J. (2007). The price and quantity of residential land in the United States. Journal of Monetary Economics, 54, 2595–2620.CrossRef

Deaton, A., & Laroque, G. (2001). Housing, land prices, and growth. Journal of Economic Growth, 6, 87–105.CrossRef

Eaton, J. (1988). Foreign-owned land. American Economic Review, 78, 76–88.

Feldstein, M. (1977). The surprising incidence of a tax on pure rent: A new answer to an old question. Journal of Political Economy, 85, 349–360.CrossRef

Frankel, M. (1962). The production function in allocation and growth: A synthesis. American Economic Review, 52, 995–1022.

George, H. (1935). Progress and poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth (Fiftieth anniversary ed.). New York: Robert Schalkenbach Foundation (1st ed.: 1879).

Gervais, M. (2002). Housing taxation and capital accumulation. Journal of Monetary Economics, 49, 1461–1489.CrossRef

Glaeser, E. L., Gyourko, J., & Saks, R. E. (2005). Why have housing prices gone up? NBER Working Paper Series No. 11129.

Grossmann, V., & Steger, T. (2016). Das house-kapital: A theory of wealth-to-income ratios. CESIFO Working Paper No. 5844.

Hornstein, A. (2009). Problems for a fundamental theory of house prices. Economic Quarterly, 95, 1–24.

Jordà, O., Schularick, M., & Taylor, A. M. (2014). The great mortgaging: Housing finance, crisis, and business cycles. NBER Working Paper Series No. 20501.

Judd, K. L. (1985). Redistributive taxation in a simple perfect foresight model. Journal of Public Economics, 28, 59–83.CrossRef

Knoll, K., Schularick, M., & Steger, T. (2014). No price like home: Global house prices, 1870–2012. CEPR Discussion Paper No. DP10166.

Petrucci, A. (2006). The incidence of a tax on pure rent in a small open economy. Journal of Public Economics, 90, 921–933.CrossRef

Phelps, E. S. (1994). Structural slumps. The modern equilibrium theory of unemployment, interest, and assets. Cambridge, MA: Harvard University Press.

Piazzesi, M., & Schneider, M. (2016). Housing and macroeconomics. NBER Working Paper 22354.

Piketty, T. (2013). Capital in the twenty-first century. Cambridge: Harvard University Press.

Piketty, T., & Zucman, G. (2014). Capital is back: Wealth-income ratios in rich countries 1700–2010. Quarterly Journal of Economics, 129, 1255–1310.CrossRef

Ricardo, D. (1817). On the principles of political economy and taxation (1st ed. 1817). In P. Sraffa (Ed.), The Works and Correspondence of David Ricardo (with the collaboration of M. H. Dobb) (11 vol., 1951–1973). Cambridge: Cambridge University Press.

Rognlie, M. (2014). A note on Piketty and diminishing returns to capital, mimeo.

Rognlie, M. (2015). Deciphering the fall and rise in the net capital share. In Conference Draft for the Spring 2015 Brookings Panel on Economic Activity.

Rowthorn, R. (2014). A note on Piketty’s capital in the twenty-first century. Cambridge Journal of Economics, 38, 1275–1284.CrossRef

Skinner, J. (1996). The dynamic efficiency cost of not taxing housing. Journal of Public Economics, 59, 397–417.CrossRef

Stiglitz, J. E. (2015a). New theoretical perspectives on the distribution of income and wealth among individuals: Part I. The wealth residual. NBER Working Paper Series No. 21189.

Stiglitz, J. E. (2015b). New theoretical perspectives on the distribution of income and wealth among individuals: Part IV. Land and credit. NBER Working Paper Series No. 21192.

Twaites, G. (2015). Why are real interest rates so low? Secular stagnation and the relative price of investment goods. Centre for Macroeconomics (CFM), Discussion Papers 1428.

Titel: Land, Housing, Growth and Inequality
verfasst von: Luigi Bonatti
Verlag: Springer International Publishing
Buch: Getting Globalization Right
Print ISBN: 978-3-319-97691-4

Electronic ISBN: 978-3-319-97692-1

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-97692-1_6

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Springer Professional "Wirtschaft"