Land-Use Restrictions -- deregulating to 1980 levels would raise labor productivity by about 10 pct, & consumption by about 9 pct

Tarnishing the Golden and Empire States: Land-Use Restrictions and the U.S. Economic Slowdown. Kyle F. Herkenhoff, Lee E. Ohanian, Edward C. Prescott. NBER Working Paper No. 23790, http://www.nber.org/papers/w23790

This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, accounts for much of these gains.

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Knowing this:

"...deregulating [land use in] all of the regions to 1980 levels would raise labor productivity by about 10 percent, and consumption by about 9 percent in the neoclassical economy, and would raise labor productivity by about 16 percent, and consumption by about 11 percent in the economy with the externality."

, we keep shooting ourselves in the foot.