Qualifying Land-Use Regulation and its Determinants

We analyze land-use regulation and the determinants thereof across Swiss municipalities. We construct several residential development stringency indices based on a comprehensive survey. These indices capture various aspects of local regulation and land-use coordination across jurisdictions. Combining these indices, we construct an index that provides harmonized information about what local regulation entails and the local regulatory environment across municipalities. Our analysis shows that historical building density, natural amenities, socio-demographic factors, cultural aspects, and municipal competition are important determinants of local land-use regulation. However, a large share of land-use regulation variation remains unexplained. Our results show that more stringent land-use regulation is associated with steeper house price increases but less urban sprawl. We test the validity of the index with regard to local refusal rates of development projects and show that the index captures a significant part of the variation in local housing supply elasticities. Based on a machine learning cross-validation model, we impute the values for non-responding municipalities