Land Use Controls and the Provision of Education

Eric A. Hanushek
Kuzey Yilmaz
Published Date
NBER Working Paper 17730
Considerable prior analysis has gone into the study of zoning restrictions on locational choice and on fiscal burdens. The prior work on zoning - particularly fiscal or exclusionary zoning - has provided both inconclusive theoretical results and quite inconsistent empirical support of the theory. More importantly,none of this work addresses important questions about the level and distribution of public goods that are provided under fiscal zoning. Since fiscal issues and Tiebout demands are central to much of the motivation for exclusionary zoning, we expand the theoretical analysis to encompass the interplay between land use restrictions and public good provision. In this, we focus on schooling outcomes,since the provision of education is one of the primary activities of local jurisdictions. We develop a general equilibrium model of location and the provision of education. Some households create a fiscal burden, motivating the use by local governments of exclusionary land-use controls. Then, the paper analyzes what the market effects of land-use controls are and how successful they are. The policies considered (minimum lot size zoning, local public finance with a head tax, and fringe zoning) demonstrate how household behavior directly affects the equilibrium outcomes and the provision of the local public good.