NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Urban Revival in America, 2000 to 2010

Victor Couture, Jessie Handbury

NBER Working Paper No. 24084
Issued in November 2017
NBER Program(s):International Trade and Investment

This paper documents and explains the striking rise in the proclivity of college-educated individuals to reside near city centers. We show that this recent urban revival is driven entirely by younger cohorts in larger cities. With a residential choice model, we quantify the role of jobs, amenities, and house prices in explaining this trend. We find that changing preferences of young college graduates for non-tradable service amenities like restaurants, bars, gyms, and personal services account for more than 50 percent of their growth near city centers. Complementary datasets confirm that the young and college-educated are indeed spending more on and taking more trips to non-tradable service establishments. Our investigation into the causes of rising preferences for non-tradable services highlights their expanding role in generating socializing opportunities with other young college graduates, but also indicates roles played by delayed family formation, rising incomes, and improvements in the quality and diversity of non-tradable services.

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Document Object Identifier (DOI): 10.3386/w24084

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