Working Paper: NBER ID: w24084
Authors: Victor Couture; Jessie Handbury
Abstract: This paper documents and explains the striking rise in the proclivity of college-educated individuals to reside near city centers since 2000. We show that this recent urban revival is driven almost entirely by younger college graduates in larger cities. With a residential choice model, we quantify the role of jobs, amenities, and house prices in explaining this trend. We find that the rising taste of young college graduates for non-tradable service amenities like restaurants and nightlife accounts for more than 40 percent of their movement toward city centers. Complementary data shows a corresponding rise in young college graduate expenditures on and trips to non-tradable services. We then link changes in both consumption and urbanization to secular trends of top income growth and delayed family formation amongst young college graduates.
Keywords: Urban revival; College graduates; Nontradable services; Residential choice
JEL Codes: R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in expenditures on and trips to nontradable services by young college graduates (J69) | rising taste of young college graduates for nontradable service amenities (R22) |
| changes in consumption and urbanization (R22) | broader secular trends (Z12) |
| high initial density of nontradable services (L89) | increased attractiveness to young college graduates (D29) |
| increasing shares of young college graduates in unmarried households without children (J12) | observed growth of this demographic in downtown areas relative to the suburbs (R23) |
| rising taste of young college graduates for nontradable service amenities (R22) | movement toward city centers (R23) |