Working Paper: CEPR ID: DP10879
Authors: Gilles Saint-Paul
Abstract: This paper provides some elements to explain the observed takeover in some urban areas of a new kind of elite associated with new economy jobs, also known as "bourgeois bohème" (bobos). This takeover has been associated with greater investment in urban amenities and "clean" means of transport, with adverse effects on commuting time. The model allows us to explain those developments by productivity is growth in the new economy, and by the differences in production processes between the new and old economies. The consequences of bobo takeover for house prices and employment of unskilled service workers are also discussed. A bunkerized equilibrium in which skilled workers in the old economy no longer reside in the city and have been replaced by service workers is studied. In such an equilibrium urban amenities are at their maximum and commuting flows have been eliminated. For some parameter values, bobos are better-off under bunkerization, in which case they may gain by favoring it with a "diversity" subsidy for unskilled workers to reside in the city.
Keywords: bobos; bunkerization; local public goods; new economy; residential choice; urban amenities; urban voting models
JEL Codes: H7; R3; R4; R5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bobo policies (J18) | house prices (R31) |
| bobo policies (J18) | unskilled worker employment (F66) |
| new economy growth (O49) | urban amenities (R11) |
| new economy growth (O49) | commuting times (R41) |
| bobo political dominance (D72) | urban amenities (R11) |
| bobo political dominance (D72) | commuting times (R41) |
| bunkerized equilibrium (D59) | house prices (R31) |
| bunkerized equilibrium (D59) | unskilled worker employment (F66) |