NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values

David Albouy

NBER Working Paper No. 14981
Issued in May 2009, Revised in March 2015
NBER Program(s):EEE, PE

This article examines and quantifies the relationship between local amenities and prices in an equilibrium model, demonstrating the role of non-traded goods and federal taxes. I derive formulae using factor shares to infer local land rents, productivity, and the total value of amenities from wage and housing-cost data, applying them to U.S. metropolitan areas. The formulae address how “wage multipliers,” heterogeneity in non-traded firm productivity, and tax-driven amenity value expropriation affect price capitalization. Wage and housing-cost variations across metros are driven more by productivity than quality-of-life differences. The most productive and valuable cities are typically coastal, sunny, mild, educated and large.

download in pdf format
   (695 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14981

Published: “What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities.” In The Review of Economics and Statistics, July 2016, 98(3): 477–487

Users who downloaded this paper also downloaded* these:
Albouy and Stuart w19919 Urban Population and Amenities: The Neoclassical Model of Location
Albouy w14472 Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas
Albouy and Ehrlich w18110 Housing Productivity and the Social Cost of Land-Use Restrictions
Glaeser w13696 The Economics Approach to Cities
Albouy w15224 Partisan Representation in Congress and the Geographic Distribution of Federal Funds
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us