December 14, 2012, 11:00–12:30
Toulouse
Room MC 203
Public Economics Workshop
Abstract
We use a frictionless neoclassical general-equilibrium model to explain cross-metro variation in population density and other urban quantities based on 3 broad amenity types: quality of life, productivity in tradeables, and productivity in non-tradeables. Analytically, we demonstrate the dependence of quantities on amenities through substitution possibilities in consumption and production. Our calibrated model predicts large elasticities, consistent with variation in U.S. data, and some empirical estimates of local labor supply. From only differences in wages and housing costs, we explain half of the variation in density, especially through quality-of-life amenities. We also show density density information can provide or refine measures of land value and local productivity.
Keywords
Population density; productivity; quality of life;