Urban Population and Amenities
We use a neoclassical general-equilibrium model to explain cross-metro variation in population density based on three broad amenity types: quality of life, productivity in tradables, and productivity in non-tradables. Analytically, we demonstrate the dependence of quantities on amenities through substitution possibilities in consumption and production. Our model clarifies the nature of commonly estimated elasticities of local labor supply and demand. From only differences in wages and housing costs, we explain half of the observed variation in density, especially through quality of life. We show that density information can provide or refine measures of land value and local productivity.
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Document Object Identifier (DOI): 10.3386/w19919
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