Urban Density
Paper Session
Sunday, Jan. 7, 2024 1:00 PM - 3:00 PM (CST)
- Chair: Vinicios Sant'Anna, Massachusetts Institute of Technology
Skill Allocation and Urban Amenities in the Developing World
Abstract
We use individual geocoded data from Peru and document that the city-size wage premium is larger for low-skilled than for high-skilled workers, in contrast with most developed countries. We interpret this evidence using a model of location choice with private amenity goods and non-homothetic preferences. Skilled workers enjoy higher incomes and devote a higher expenditure share to amenity goods, such as private schools or upper-class neighborhoods. The supply of these amenities is subject to a fixed cost, and only sufficiently large cities have enough demand to offer them. Thus, skilled workers demand a higher wage premium to live in small cities, and the returns to working in a large city are smaller for them than for their unskilled counterparts. Our quantitative exercises indicate that the mechanism accounts for two-thirds of the gap in the city-size wage premium between high-skilled and low-skilled workers.Urbanization and Firms' Stock Returns
Abstract
Firms located in dense urban areas experience higher productivity due to the flow of ideas and innovation in these areas. Through this productivity channel, the characteristics of the urban areas in which firms are located affect their stock returns. We use high-resolution satellite images and image segmentation algorithms to develop exogenous measures of urbanization for the most populated metropolitan statistical areas (MSAs) in the US. We find that firms located in areas with a higher potential for urban development are perceived as less risky in the stock market because they can feasibly sustain their productivity growth, leading to lower stock returns.Building Tall, Falling Short: An Empirical Assessment of Chinese Skyscrapers
Abstract
This article examines the determinants and economic efficiency of construction-led urbanization in China, focusing on skyscraper development as a prominent example. As the emerging leader in skyscraper construction, China accounts for 60\% of all high-rises built around the world since 2000. Employing a political economy lens, we find that local governments provide developers with significant discounts on land prices in non-central locations by manipulating land auctions in an attempt to encourage the development of new urban agglomerations, particularly in cities where local leaders are motivated by stronger career incentives and during the central government's monetary easing policy period. However, 5 to 10 years after their completion, these subsidized skyscrapers yield few spatial spillovers in the form of a land price premium, new business formation, or endogenous urban amenities, in contrast to the substantial positive spillovers near unsubsidized skyscrapers. The lack of spillover effects is caused by a combination of poor location, less reliable developers, and inadequate supporting infrastructure, calling into question the effectiveness of state-engineered urban development.Discussant(s)
Daniel Broxterman
,
Florida State University
Enrique de la Rosa-Ramos
,
King’s College London
Vinicios Sant'Anna
,
Massachusetts Institute of Technology
Sisi Zhang
,
Federal Reserve Bank of Philadelphia
JEL Classifications
- R1 - General Regional Economics