The Production Function for Housing: Evidence from France

Arbeitspapier

We propose a new nonparametric 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 by summing across the marginal products of non-land inputs. Differences in non-land inputs 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 correcting for differences in user costs between land and non-land inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to non-land inputs of about 0.80.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 10373

Classification and Topics

• Classification: Wirtschaft ; Land Use Patterns ; Housing Supply and Markets ; Other Spatial Production and Pricing Analysis
• Subject: housing ; production function

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Combes, Pierre-Philippe ; Duranton, Gilles ; Gobillon, Laurent
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/149232
• Last update: 10.03.2025, 11:44 AM CET