NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Urban Population and Amenities: The Neoclassical Model of Location

David Albouy, Bryan Stuart

NBER Working Paper No. 19919
Issued in February 2014
NBER Program(s):   EEE   LS   PE

We analyze a neoclassical general-equilibrium model to explain cross-metro variation in population, density, and land supply based on three amenity types: quality-of-life, productivity in tradables, and productivity in non-tradables. We develop a new method to estimate elasticities of housing and land supply, and local-productivity estimates, from cross-sectional density and land-area data. From wage and housing-cost indices, the model explains half of U.S. density and total population variation, and finds that quality of life determines locations more than employment opportunities. We show how changing quality of life, relaxing land-use regulations, or neutralizing federal taxes can redistribute populations massively.

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This paper was revised on August 3, 2016

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Document Object Identifier (DOI): 10.3386/w19919

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