Working Paper: NBER ID: w8598
Authors: Edward L. Glaeser; Joseph Gyourko
Abstract: People continue to live in many big American cities, because in those cities housing costs less than new construction. While cities may lose their productive edge, their houses remain and population falls only when housing depreciates. This paper presents a simple durable housing model of urban decline with several implications which document: (1) urban growth rates are leptokurtotic -- cities grow more quickly than they decline, (2) city growth rates are highly persistent, especially amount declining cities, (3) positive shocks increase population more than they increase housing prices, (4) negative shocks decrease housing prices more than they decrease population, (5) the relationship between changes in housing prices and changes in population is strongly concave, and (7) declining cities attract individuals with low levels of human capital.
Keywords: No keywords provided
JEL Codes: R
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| negative shocks to a city (R11) | decrease in housing prices (R31) |
| decrease in housing prices (R31) | gradual decline in population (J11) |
| positive demand shocks (E00) | increase in housing units (R31) |
| positive demand shocks (E00) | less impact on prices (F69) |
| lower housing prices (R31) | attract low-skilled workers more than high-skilled workers (J69) |
| negative shocks (F69) | decrease in housing prices (R31) |
| negative shocks (F69) | decrease in population (J11) |
| negative shocks (F69) | confounding variable slows population decline despite falling prices (J19) |
| relationship between changes in housing prices and population (R23) | strongly concave (D30) |
| declining cities (R11) | attract individuals with low levels of human capital (J79) |