Working Paper: NBER ID: w19041
Authors: Leah Platt Boustan; Devin Bunten; Owen Hearey
Abstract: This handbook chapter seeks to document the economic forces that led the US to become an urban nation over its two hundred year history. We show that the urban wage premium in the US was remarkably stable over the past two centuries, ranging between 15 and 40 percent, while the rent premium was more variable. The urban wage premium rose through the mid-nineteenth century as new manufacturing technologies enhanced urban productivity; then fell from 1880 to 1940 (especially through 1915) as investments in public health infrastructure improved the urban quality of life; and finally rose sharply after 1980, coinciding with the skill- (and apparently also urban-) biased technological change of the computer revolution. The second half of the chapter focuses instead on the location of workers and firms within metropolitan areas. Over the twentieth century, both households and employment have relocated from the central city to the suburban ring. The two forces emphasized in the monocentric city model, rising incomes and falling commuting costs, can explain much of this pattern, while urban crime and racial diversity also played a role.
Keywords: No keywords provided
JEL Codes: N91; N92; R0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| new manufacturing technologies (O14) | urban wage premium (J31) |
| public health investments (H51) | decline in urban wage premium (J39) |
| skill-biased technological changes (J24) | urban wage premium (J31) |
| rising incomes (E25) | decentralization of households and employment (D13) |
| decreasing commuting costs (R48) | decentralization of households and employment (D13) |
| urban crime (K42) | decentralization of households and employment (D13) |
| racial diversity (J15) | decentralization of households and employment (D13) |
| public health improvements (I14) | decline in urban mortality rates (I14) |
| public health improvements (I14) | urban quality of life (R23) |