Graduation Year

2024

Date of Submission

12-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

David Bjerk

Reader 2

Manfred Keil

Abstract

This paper investigates the impact of inclusionary zoning policies, which require a certain percentage of units in a development to be sold or rented below market rate to individuals who meet specific income thresholds. I constructed a panel dataset of 101 incorporated cities in the San Francisco Bay Area and restricted the model to 79 cities across 23 years from 2000 to 2022. I utilize a difference-in-difference and quasi-event study framework to evaluate the average effect of treatment on cities. I also estimate the relative effects of treatment preceding or succeeding the adoption of a policy which allows me to examine the heterogeneity of treatment impact with respect to time as well as account for the fact that there is no uniform date of treatment for cities in the dataset. I also perform additional regressions using house price data from the upper and lower thirds of the price distribution to examine treatment heterogeneity for different price segments. On average, adoption of inclusionary zoning policies is associated with house prices ~8.8% greater than cities that did not. These results are robust when examining price data for houses in the upper third and lower third of the price distribution and remain statistically significant at the 1% level. Results from the specification using lagged and leading dummies for treatment are more mixed. I observed no statistically significant difference between prices in the pre-treatment period. Most of the coefficients on the lagged dummies are insignificant but they are positive and their magnitude is appreciable (~3% to 5% higher prices).

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