Mayors matter

Via Kevin Lewis, a new paper in an influential econ journal demonstrates that mayoral elections have a large influence on housing supply outcomes. It also shows that developer’s political contributions pay off in ways that sound like corruption.

Returns to Political Contributions in Local Housing Markets
by Rui Yu
Review of Economics and Statistics, forthcoming

Abstract:
This paper examines how politically connected firms shape housing supply in U.S. cities. Using new data on campaign donations to U.S. mayors and a regression discontinuity design, I present three findings. First, developers connected to the mayor sell more new housing units. Second, more sales of new housing by connected developers coincide with higher local housing supply: cities where mayors received more developer donations issue nearly 70 percent more permits for new housing units. Third, differences in mayors’ pre-existing policy stances — rather than connections to developers — is a quantitatively larger determinant of local housing supply.