Late-19th-century rowhomes in the historic Pullman neighborhood in Chicago. Andrew Nelles/Reuters

For better or worse, the shape of modern Chicago has a lot to do with decisions made in the 1920s.

You think cities have problems today? Look back to late 19th century America, when rapid industrialization and mass immigration brought explosive population growth and squalid living conditions for the poor. Families lived cheek-to-jowl in tenement districts near polluting factories, and they walked on streets filled with fetid, uncollected human and animal waste. Noxious fumes frequently seeped over to higher-end homes and businesses, too. Without proper sewers or drinking water systems, infectious disease proliferated.

This was the world in which zoning codes were born. With a very 20th century spirit of orderly progress, zoning attempted to separate different kinds of land uses, in order to protect public health, economic enterprise, and, of course, property values. In Chicago, for example, factories were clustered near other factories, far away from neighborhoods of single-family homes. Higher-density apartment housing was set apart, too, but could be set closer to commercial and industrial uses.

Many of the policies and reforms enacted around the turn of the 20th century still shape urban life today, mostly for the good. (Think of all the excrement you might otherwise be stepping through if it weren’t for standardized sanitation codes.) Zoning counts as one of those long legs. In fact, for better or for worse, the land-use codes developed a century ago may have more to do with cities’ present-day economic patterns than many of us likely appreciate, according to a new working paper published by the National Bureau of Economic Research.

A sample of Chicago’s 1923 use zoning map shows an area west of downtown, along the Chicago River. “Unhatched areas are zoned for apartments, hatched areas are zoned for commercial uses, and cross-hatched areas are zoned for manufacturing.” (NBER)

Randall Walsh, an urban economist at the University of Pittsburgh and one of the co-authors, says there’s an assumption in his field that zoning laws simply follow the land uses that came before them, and that subsequent land use changes simply follow the market. For example, if an industrial area gets rezoned for housing, it must be because that was a higher-value use of the land. But his research shows that, at least in one major city, it’s really been the other way around. “In the short run, it can look like zoning is really easy to change,” he says. “But we looked at the long run, and found that these policies can have a huge impact, years into the future.”

Walsh and two other urban economists investigated zoning’s long-term effects in Chicago, using 1920s parcel-level data on land use and market values prior to, and immediately after, the adoption of the city’s first comprehensive zoning ordinance in 1923. They compared these early quilts of land use to that of the present day (or, at least, to the most recent complete dataset available, which came from 2005).

Contrary to what many economists may believe, they first found that zoning did not merely ratify existing land uses. Lot by lot, they found significant variation between the activities that predated zoning and those that came after, especially as years went by. For example, some factories and shopping areas that didn’t conform to the 1923 code were allowed to stay in their respective locations, thanks to a “grandfather” clause. But over time, the vast majority of them disappeared. The powerful force of zoning can be seen on a citywide scale, too: Whereas 82 percent of Chicago’s developed blocks had some form of commerce happening in 1922, that share had dropped by about half by 2005, researchers found.

In other words, the way Chicago looks in the 21st century tracks much more closely with the desires of its planners in 1923 than it does with the city that preceded zoning. This fact has had a huge effect on economic patterns, too. For example, the researchers found that exclusive residential zoning had a significant impact on home prices, driving up values in neighborhoods cordoned off for single-family homes. On a citywide level, they used a regression analysis to find that the zoning code of 1923 had bigger role in shaping economic patterns—i.e., where commercial and industrial activity is going on today—than either pre-existing transportation networks or geography, two factors you might think would best explain why there’s a factory by the old railroad tracks, or a shopping district near downtown.  

Maps comparing Chicago’s distribution of commercial land uses (shown in red) in 1922,  how they were imagined in 1923, and as they existed in 2005. (NBER)

Besides de-emphasizing the effect of those factors in shaping land use, this research also takes some of the power away from the “market”—a faceless, nameless force—and places more of it with the humans crafting these codes.

Zoning’s effects on other people are also where this work starts to matter for real-world reasons. Because while zoning has protected some folks from industrial stench and run-off, it’s also kept others—especially poor people of color—locked into neighborhoods adjoining or surrounding it. Cities have also used density restrictions to bar the entry of minorities into more affluent, whiter neighborhoods.

Maps comparing Chicago’s distribution of industrial land uses (shown in blue) in 1922, how they were imagined in the zoning code of 1923, and as they existed in 2005. (NBER)

Although the present paper didn’t explicitly analyze how Chicago’s old zoning codes have influenced racial segregation, a companion paper published in July by the same researchers found that the laws drawn up in 1923 were discriminatory: Areas with more black residents were zoned for higher-density housing, and “neighborhoods with larger populations of blacks or recent immigrants were zoned disproportionately for manufacturing.” Chicago consistently ranks as among the most segregated cities in the U.S., and its present-day economic divisions track closely with race (as well as with municipally recognized community boundaries). It wouldn’t be surprising to learn that zoning laws (much like housing policy) dating back a century are in some ways responsible. That’s a theory that needs investigation, Walsh says.

In that light, zoning’s enduring iron grip on city shapes makes it seem like an entrenched force for bad. On the other hand, cities contemplating radical rezoning now now could reap big benefits decades down the line. For example, cities aiming to lower carbon emissions through higher densities and fewer cars should take heart. Some hope for the climate might lie in zoning, given a chance to take hold. “The timelines are long enough that we should think about changing a city’s spatial structure,” says Walsh. “We should take this stuff fairly seriously.”

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