Abundance

by Ezra Klein

Glaeser and his colleagues go on to look at the size of the firms involved. It turns out that big home construction companies are much more efficient than small home construction companies. No surprise there. But the market in home construction is dominated by small firms: more than 60 percent of employment in single-family home construction is in firms with fewer than 10 employees; in manufacturing, most employees work in firms of more than 500 people.66 Why is home construction in America dominated by such small firms? The researchers pick through the data and find that firms are allowed to build on less and less land, and are subject to more and more land use regulations, in ways that choke off their ability to grow and scale their work across cities and states.