TY  - RPRT
        AU  - Combes, Pierre-Philippe
AU  - Duranton, Gilles
AU  - Gobillon, Laurent
        TI  - The Production Function for Housing: Evidence from France
        PY  - 2016/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 10373
        UR  - https://www.iza.org/publications/dp10373
        AB  - We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the first-order condition for profit maximisation with respect to non-land inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of non-land inputs. Differences in non-land inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newly-built single-family homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a Cobb-Douglas function and close to constant returns. After correcting for differences in user costs between land and non-land inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to non-land inputs of about 0.80.
        KW  - production function
KW  - housing
        ER  -