NYC’s tight housing market doing damage to the economy

The tight housing market in cities such as New York and San Francisco isn’t just inconvenient for its residents. It’s also a detriment to the entire U.S. economy, according to a new study.

Lack of inventory and a tight housing market is preventing workers from moving to places where they’d be most productive, a new study cited by Bloomberg found. Professor Enrico Moretti at the University of California at Berkeley and University of Chicago’s Professor Chang-Tai Hsieh looked at data for 220 cities t0 determine how much they added to the country’s national output growth between 1964 and 2009, Bloomberg News reported.

If land-use constraints in high-productivity cities such as New York are reduced, those cities could expand their labor forces, according to the website. This would give a 9.5 percent bump to the country’s gross domestic product.

“The places that are delivering the most output are unaffordable, and I think that is an issue,” Aaron Renn, a senior fellow at the Manhattan Institute for Policy Research, told the website.

While labor productivity and demand grew quickly in those cities, those towns weren’t the main growth engine, according to the new study. While the local economies grew by 19.3 percent over that time, the research found, those cities contributed 6.1 percent to aggregate growth.

“A limited number of American workers can have access to these very high-productivity cities,” Moretti told Bloomberg. [Bloomberg News] — Claire Moses