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New Paper Friday

In what I hope will be a regular feature, I want to highlight a few papers and articles in state and local government law that I’ve read recently and that I think you should check out.


This Article uncovers a critical disjuncture in our system of providing affordable rental housing. At the federal level, the oldest, fiercest debate in low-income housing policy is between project-based and tenant-based subsidies: should the government help build new affordable housing projects or help renters afford homes on the private market? But at the state and local level, it is as if this debate never took place. The federal government (following most experts) employs both strategies, embracing tenant-based assistance as more cost-effective and offering tenants greater choice and mobility. But this Article shows that state and local housing voucher programs are rare, small, and limited to special populations. States and cities almost exclusively provide project-based rental assistance. They move in lockstep despite disparate market conditions and political demands: project-based spending overwhelmingly predominates in states that are liberal or conservative and high- or low-rent. States have done so across decades of increased spending. This uniform subnational approach suggests an unhealthy federalism: neither efficient nor experimental. This Article further diagnoses why states have made this unusual choice, identifying four primary culprits: 1) fiscally-constrained states use project-based models to minimize painful cuts during recessions; 2) incomplete federal housing subsidies inadvertently incentivize project-based spending; 3) the interest groups involved in financing and constructing affordable housing are relatively more powerful subnationally; and 4) rental assistance’s unusual, lottery-like nature elevates the value of visible spending over cost-effectiveness. Finally, this Article points a path towards reform. Taking a federalist perspective allows for a new understanding of federal housing statutes. Better cooperative models could accept states’ limitations in providing rental assistance—and exploit their strengths.

This paper is a banger! It both identifies a real puzzle about the way we govern ourselves in a multi-level democracy and answers it. So, so cool. Kazis is fast becoming one of the most important land use and local government law scholars in the country. Check it out!

2. Local Productivity Spillovers, by Nathaniel Baum-Snow, Nicolas Gendron-Carrier, & Ronni Pavan (HT: David Fontana)


Using panel data on high-skilled services firms in three large Canadian

cities, this paper presents evidence of revenue and productivity spillovers across firms

at fine spatial scales. Accounting for the endogenous sorting of firms across space,

estimates indicate an average elasticity of firm revenue and productivity with respect to

the average quality of other firms within 75 meters of about 0.02. Impacts are very local

in nature and higher quality firms are found to benefit more from higher average quality

peers. We find scant evidence that the average firm benefits from being surrounded

by a greater amount of economic activity at this spatial scale. Tests for mediation

of peer effects through various channels suggest that they primarily operate through

knowledge spillovers rather than through other mechanisms commonly considered to

drive agglomeration forces.

Economists have long argued that there are several forces encouraging firms to cluster together or agglomerate – reduced shipping costs, the benefits of market depth, and information spillovers (or learning from people nearby). It has always been hard to separate agglomeration gains, though. This paper – Nathaniel Baum-Snow is one the best urban economists working today – does an amazing job of identifying the effect of information spillovers specifically on productivity for high quality firms.

Further, it shows that there are higher firm-firm gains in bigger and richer cities (and from bigger firms) providing a micro-foundation for the “superstar city” phenomenon.

“Coupled with our evidence that higher quality firms experience larger spillovers from peer groups of the same quality than do lower quality firms, however, our baseline results indicate an important interaction between sorting and firm externalities that generates aggregate increasing returns at the city level. That is, evidence in this paper shows that the existence of larger and more productive firms in larger cities itself can generate agglomeration economies. All of this is consistent with Combes et al. (2012)'s evidence that static firm TFP distributions have higher means and more right dilation in larger cities. That is, the “Plant Size-Place Effect” of larger firms in larger cities (Manning, 2009) also means there will be larger rm-rm spillovers in larger cities, resulting in higher aggregate productivity. This is the firm level counterpart to Baum-Snow and Pavan (2012) and De la Roca and Puga (2017)'s evidence that workers' returns to experience are greater in larger cities, and that this prole is increasing in worker ability.”

After you read this paper, you should read Greg Shill’s paper from last spring on what is basically the same phenomenon among elite law firms, The Puzzle of Persistence in Biglaw Clustering

And then some shorter pieces in the media...

If you want to know how off the rails California's system of environmental review has gone, and how aggressively it is used by anti-development forces, look no further than this fun but enraging piece by Henry Grabar. A judge ordered UC-Berkeley to freeze any increase in enrollment.

Here's a quote:

"It’s the latest and most explicit example of California’s famously stringent environmental law being used for population control. Instead of governing the construction of dams or smokestacks, CEQA is frequently leveraged by anti-development groups in California to oppose apartment buildings, homeless shelters, and bus lanes, among other things. Now it’s being employed to micromanage university admissions."

I find many of the arguments in favor of Vermeulean “common good” judging more than a little perplexing. Beyond being against it, I find it hard to believe that any one is as actually into that kind of stuff – it seems so disconnected from anyone’s politics, outside of a few columnists and law professors. This argument, by Holden Tanner, makes some similar moves but argues they find a more natural home in the more free-wheeling world of state court judging. This struck me as more likely and, in Tanner’s hands, more clearly part of a discernible and practical legal-political program (and hence much more worrying, at least from my perspective.) Even if you disagree with its premises (maybe particularly if you disagree with its premises, as I do!!), this is very much worth reading


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