Daniel P. Murphy

Category: Housing Markets

  • Work From Home and the Post-COVID Spending Surge

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    Abstract

    U.S. personal saving rates have remained below pre-pandemic levels. This paper links the sustained increase in consumption to the rise of working from home (WFH). Using PSID 2019–2023 data and an industry-based instrument for WFH, I find that households induced to WFH raised expenditure by more than \$7,000 on average, holding income and wealth constant. Spending rose not only among movers but also among non-movers, consistent with a persistent shift in preferences toward housing-complementary consumption. The estimates imply that WFH reduced the aggregate saving rate by 1.2 percentage points, and they suggest that remote work structurally increased demand for housing-related consumption, contributing to the post-pandemic spending boom.

  • Land Taxes: From Theory to Practice

    with Nick B. Allen, John Anderson and Zhou Yang
    National Tax Journal: 77(4), Read

    Abstract

    The interest in land taxes has increased as concerns around revitalization, increased density, and housing affordability have become widespread. This paper provides multiple perspectives that bridge the gap between theory and practice. We offer new insights into questions of where land taxes are likely to be most effective. We also discuss advantages and disadvantages of alternative features including assessment problems, tax incidence, and implementation challenges. Together this paper provides a guide for policy makers and researchers for the future of land taxes.

  • Home Size, Residential Density, and Aggregate Demand

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    Abstract

    This paper documents that smaller homes and denser neighborhoods are associated with higher household saving rates. This relationship is apparent within and across U.S. households, across countries, and over time in the U.S. The micro data indicate the importance of complementarity between housing and non-housing consumption. Incorporating complementarity into a macroeconomic model implies that denser countries with smaller homes have higher household savings rates, a lower natural rate of interest, and lower sensitivity of non-housing consumption to monetary policy. Furthermore, growth in the non-housing sector alongside stable home sizes is associated with a declining natural rate of interest. High density and small homes may contribute to Japan’s lost decade and persistent stagnation.

  • Housing cycles and gentrification

    Journal of Monetary Economics, 144, 103550, Read

    Abstract

    The analysis in this paper documents a high-frequency link between housing markets and downtown gentrification since the mid-1990s. Specifically, property values and the share of formally educated residents increase more in downtown locations than in suburbs during MSA-wide housing market expansions. This relationship holds conditional on changes in MSA-level high-end incomes and is evident at short (three-year) and longer time horizons. I propose a mechanism to account for this evidence based on stronger pass-through from housing market expansions to housing costs for low-income (less formally educated) households. This evidence has implications for the effects of macroeconomic stabilization policies on inequality.

  • Implicit Land Taxes and Their Effect on the Real Economy

    with Nathan Seegert, Revise and Resubmit, Journal of Public Economics, Read

    Abstract

    We show empirically that land taxes are associated with higher density, neighborhood diversity, business formation, and other indicators of economic performance. To investigate land taxes empirically, we estimate implicit land taxes (or subsidies) for over 2,000 counties in the U.S. These implicit land taxes arise due to idiosyncratic discrepancies in the evaluation of land and structures between tax assessors and buyers and sellers in the market.  We find substantial dispersion in implicit land taxes across U.S. counties and within metropolitan areas. They are also highly persistent within counties. Finally, we develop a model of land taxes and endogenous population to rationalize our results.