Since the global financial crisis, productivity growth in the UK has slowed dramatically, with wages now significantly lower than they would have been had earlier trends continued. This slowdown is closely linked to geography: a small number of highly productive cities have performed strongly, while much of the country lags behind.
This project examines whether housing constraints contribute to the overall slowdown in productivity growth. Evidence increasingly suggests that cities are not just places where economic activity happens, but environments where workers build skills that raise their productivity over time, with these gains accumulating more rapidly in dense, high-productivity clusters. However, for the UK's most productive cities, housing is extremely expensive. This project investigates whether restrictive planning policies limit who can access these high-learning environments, reducing skill accumulation, lifetime earnings, and overall economic growth.
This research combines longitudinal administrative data on UK workers with a quantitative spatial
equilibrium model of the national economy to answer three questions:
1. How much faster do workers accumulate skills in UK cities compared to other regions?
2. How much of the cost of housing is due to planning restrictions (the "regulatory wedge")?
3. How much would the UK economy grow if planning reforms allowed more workers to move to
high-productivity areas?
The findings will contribute to debates on housing supply, productivity, and inclusive growth, providing evidence on whether housing policy plays a central role in shaping both economic performance and inequality in the UK.