Cities Without Skylines: Worldwide Building-Height Gaps and their Possible Determinants and Implications

There is a large literature on U.S. cities measuring the extent and stringency of land-use regulations and how regulatory and geographical constraints affect important outcomes such as housing prices and economic growth. This paper is the first to study the global extent and impact of regulatory and other constraints by estimating what we call building-height gaps. Using a novel data set on the year of construction and heights of tall buildings around the world, we compare the total height of a country's stock of tall buildings to what the total height would have been if supply was more elastic, based on parameters from a benchmark set of countries. These gaps are larger for richer countries and for residential buildings than for commercial buildings in such countries. The gaps are driven by under-building in central areas of larger cities. These gaps are not compensated by tall building construction in peripheral areas of cities or less stringent limits on outward expansion beyond the existing boundaries of the cities. Countries with older, historic structures have larger gaps, likely due to more stringent height regulations and dispersed ownership that inhibits land assembly. Lastly, the gaps correlate strongly with international measures of housing prices, sprawl, congestion, and pollution.