Working Paper: CEPR ID: DP9240
Authors: Pierre-Philippe Combes; Gilles Duranton; Laurent Gobillon
Abstract: We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban cost increases with city population with an estimate of about 0.04 for an urban area with 100,000 inhabitants to 0.10 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and distance gradients for house and land prices.
Keywords: agglomeration; house prices; land prices; land use; urban costs
JEL Codes: R14; R21; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| city population (R23) | urban costs (R29) |
| city population (R23) | housing prices (R31) |
| city population (R23) | transportation costs (L91) |
| restrictive urban growth policies (R28) | urban costs (R29) |
| urban costs (R29) | agglomeration economies (R11) |