Working Paper: CEPR ID: DP10097
Authors: Gabriel M. Ahlfeldt; Stephen J. Redding; Daniel M. Sturm; Nikolaus Wolf
Abstract: This paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks. The model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions, which yield a gravity equation for commuting flows. To structurally estimate agglomeration and dispersion forces, we use data on thousands of city blocks in Berlin for 1936, 1986 and 2006 and exogenous variation from the city's division and reunification. We estimate substantial and highly localized production and residential externalities. We show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure.
Keywords: agglomeration; cities; commuting; density; gravity
JEL Codes: N34; O18; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Berlin's division (F55) | reorientation of land prices (R14) |
| Berlin's division (F55) | changes in employment patterns (J63) |
| Berlin's division (F55) | diminished economic interactions (F69) |
| diminished economic interactions (F69) | decline in employment opportunities (J68) |
| diminished economic interactions (F69) | decline in residential attractiveness (R23) |
| workplace density (J29) | productivity (O49) |
| residential density (R21) | amenities (Z31) |