Working Paper: CEPR ID: DP13440
Authors: Gabriel Ahlfeldt; Elisabetta Pietrostefani
Abstract: This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 347 estimates of density elasticities from 180 studies. More than 100 of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses. We contribute own estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin, inconsistent or non-existent. Along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities. Applying them to a scenario that roughly corresponds to an average high-income city, we find that in per-capita present value terms (at a 5% discount rate), a 1%-increase in density implies an increase in wage and rent of $280 and $347. The decrease in real wage net of taxes of $156 is partially compensated for by an aggregate amenity effect of $100 and there is a positive external welfare effect of $60.
Keywords: compact city; density; meta-analysis; elasticity; present value
JEL Codes: R38; R52; R58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| density increase (R11) | wages increase (J31) |
| density increase (R11) | rents increase (R21) |
| decrease in real wages net of taxes (J39) | positive external welfare effect (D69) |
| density increase (R11) | amenity effect increase (Q51) |
| log-point increase in density (C46) | wages increase (J31) |
| log-point increase in density (C46) | patent activity increase (O39) |
| log-point increase in density (C46) | consumption variety increase (D11) |
| log-point increase in density (C46) | preservation of green spaces increase (Q26) |
| log-point increase in density (C46) | car use decrease (R48) |
| log-point increase in density (C46) | energy consumption decrease (Q41) |
| log-point increase in density (C46) | crime decrease (K42) |
| log-point increase in density (C46) | costs of providing local public services decrease (H79) |
| log-point increase in density (C46) | rents increase (R21) |
| log-point increase in density (C46) | construction costs increase (L74) |
| log-point increase in density (C46) | pollution concentration increase (Q53) |
| log-point increase in density (C46) | skill wage gaps increase (J31) |
| log-point increase in density (C46) | mortality risk increase (I12) |
| log-point increase in density (C46) | lower average speed decrease (R48) |
| log-point increase in density (C46) | reduced self-reported wellbeing decrease (I31) |