Campaign Finance and Housing Constraints

Rui Yu, Business Economics and Public Policy, The Wharton School

Abstract: What is the effect of housing supply regulations on innovation? Just as innovation has become increasingly localized, restrictive local building policies are cited as the cause of skyrocketing housing prices in American cities; yet evidence is limited on the effect of such policies. I introduce a new dataset on the campaign finance of U.S. mayoral candidates from 1990-2017 to test the influence of environmental advocacy groups on building restrictiveness. This micro-data of individual, firm, and political organizations; monetary contributions yield measures of activist support. Using a regression discontinuity design around close elections, I test whether a change in regulation affects local construction activity and innovation generation.