How have the longer journeys to work faced by Black commuters evolved in the United States over the last four decades? Black commuters spent 50.3 more minutes commuting per week in 1980 than White commuters; this difference declined to 22.4 minutes per week in 2019. Two factors account for the majority of the difference: Black workers are more likely to commute by transit, and Black workers make up a larger share of the population in cities with long average commutes. Increases in car commuting by Black workers account for nearly one quarter of the decline in the racialized difference in commute times between 1980 and 2019. Today, commute times have mostly converged (conditional on observables) for car commuters in small- and mid-sized cities. In contrast, persistent differences in commute times today arise in large, segregated, congested, and—especially—expensive cities, revealing the limits of cars in overcoming entrenched racialization of other factors of commuting.
Abstract: Highly productive U.S. cities are characterized by high housing prices, low housing stock growth, and restrictive land-use regulations (e.g., San Francisco). While new residents would benefit from housing stock growth due to higher incomes or shorter commutes, existing residents justify strict local land-use regulations on the grounds of congestion and other costs of further development. This paper assesses the welfare implications of these local regulations for income, congestion, and urban sprawl within a general equilibrium model with endogenous regulation. In the model, households choose from locations that vary exogenously by productivity and endogenously according to local externalities of congestion and sharing. Existing residents address these externalities by voting for regulations that limit local housing density. In equilibrium, these regulations bind and house prices compensate for differences across locations. Relative to the planner’s optimum, the decentralized model generates spatial misallocation whereby high-productivity locations are settled at too-low densities. The model admits a straightforward calibration based on observed population density, expenditure shares on consumption and local services, and local incomes, as well as house prices and construction costs in the most expensive cities. Quantitatively, welfare and GDP would be 1.4% and 2.1% higher, respectively, under the planner’s allocation. Abolishing zoning regulations entirely would increase GDP by 6%, but lower welfare by 5.9% as the increased consumption would be outweighed by greater congestion costs. However, if the profits from development are not shared broadly, than the typical household may see an improvement in welfare from zoning abolition.
Urban housing markets are characterized by racial sorting, but equilibrium prices respond to marginal buyers and thus may mask underlying preferences for segregation. Large migration shocks can make visible these otherwise inframarginal preferences. We study the effects of Hurricane Katrina-induced displacement on housing markets in receiving neighborhoods in Texas, where 1 in 5 New Orleanians relocated. Using an event study design, we find that the relocation of 100 additional Katrina survivors to a receiving ZIP code is associated with a 2.2% decline in relative house prices five years after the storm. This effect is driven by responses to movers from predominantly Black origin blocks. We argue that our findings are best explained by a preference for segregation on the part of incumbent White residents. In this case, racial stratification in the effect of a disaster is followed by racial stratification in economic responses.
Car-based transportation networks (as in Phoenix) necessitate parking at origin and destination in order to establish a link—but the space devoted to parking lowers its ability to provide housing and consumer amenities. Walking and transit networks (as in Manhattan) have no such tradeoff, and a city reliant on them will be able to make fuller use of its land for productive purposes like amenities and housing. However, they hinder mobility in other ways: walking does not get you far, and using transit requires adhering to the routes and stops the city’s transit agency provides. In this paper, we develop and calibrate a spatial consumer city model to study what would happen if Phoenix banned cars, delineating the roles of parking conversion, of the light rail network, and of a last mile option. Together with a last mile option, Phoenix’s current light rail line would be able to sustain a meaningful (if smaller) population—but only if Phoenix converts its current parking to other uses. We then ask the reverse: what would happen if Manhattan required parking? The model indicates the island would essentially empty, as the declining capacity of each block lowers the vibrancy of the city, inducing still more residents to leave. Altogether, these model outcomes tell a story of agglomeration through complementarities. The transportation network and incumbent land use must ensure a high degree of access to jobs and amenities in order for enough people to choose to live in the city and thereby support those amenities.
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.
Abstract: The durability of the real estate capital stock could hinder climate change adaptation because past construction in beautiful but increasingly risky coastal areas anchors the population. But, coastal developers anticipate that their asset also faces more risk and this creates an incentive to seek adaptation strategies ranging from; self protection, to reducing capital durability to seeking an exit option. The option value offered by short lived capital is greater if the volatility of local shocks increases over time. Climate change is likely to increase such volatility. Building on past work that has studied the consequences of persistent local labor demand declines, this paper studies how persistent local new climate risks impact the real estate investor's joint decision of locational choice, capital durability and maintenance.
Abstract: We examine the contribution to economic growth of entrepreneurial "marketplace information" within a regional endogenous growth framework. Entrepreneurs are posited to provide an input to economic growth through the information revealed by their successes and failures. We empirically identify this information source with the regional variation in establishment births and deaths, which create geographic information asymmetries that influence subsequent entrepreneurial activity and economic growth. To account for the potential endogeneity caused by forward-looking entrepreneurs, we utilize instruments based on historic mining activity. We find that local establishment birth and death rates have significant effects on subsequent entrepreneurship and employment growth for US counties and metropolitan areas.