>Abstract:  
  
We develop a framework to estimate the economic value of a recent zoning reform in the city of Sao Paulo, which altered maximum permitted construction at the city-block level. Using a spatial regression discontinuity design, we show that developers respond to the reform with short-run increases in filings for multi-family construction permits in blocks with higher allow able densities. In the medium-run we observe increases in housing availability and reductions in house prices in neighborhoods that were allowed more densification. Welfare is then esti mated with an equilibrium model of housing demand and supply that allows for endogeneous housing regulation. We finding that, in the long-run, the reform produces a 1.9% increase in housing stock and a 0.5% reduction in prices, with substantial heterogeneity across neighbor hoods. Consumer welfare gains due to price reductions are small, but increase 4-fold once ac counting for changes in built environment, with more gains accruing to college educated and higher income families. However, nominal house price losses faced by landlords and existing homeowners overshadow all consumer welfare gains.

Erreicht wurde es durch die Reform der Planung in Ortschaften, die an dem öffentlichen Verkehr angebunden sind. Seinerseits müsste die Planungshoheit der Gemeinden weit eingeschränkt werden.

AEJ study: Zoning reform in São Paulo to permit dense housing construction along transit corridors led to more housing supply and lower housing prices. The reform produced overall welfare gains for the city, benefitted future homeowners and developers while harming landlords and incumbent homeowners