Abstract

http://ssrn.com/abstract=1408901
 
 

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What are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values


David Albouy


University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

May 2009

NBER Working Paper No. w14981

Abstract:     
This article examines and quantifies the relationship between local amenities and prices in an equilibrium model, demonstrating the role of non-traded goods and federal taxes. I derive formulae using factor shares to infer local land rents, productivity, and the total value of amenities from wage and housing-cost data, applying them to U.S. metropolitan areas. The formulae address how “wage multipliers,” heterogeneity in non-traded firm productivity, and tax-driven amenity value expropriation affect price capitalization. Wage and housing-cost variations across metros are driven more by productivity than quality-of-life differences. The most productive and valuable cities are typically coastal, sunny, mild, educated and large.

Number of Pages in PDF File: 70


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Date posted: May 26, 2009  

Suggested Citation

Albouy, David, What are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values (May 2009). NBER Working Paper No. w14981. Available at SSRN: http://ssrn.com/abstract=1408901

Contact Information

David Albouy (Contact Author)
University of Michigan at Ann Arbor - Department of Economics ( email )
611 Tappan Street
Ann Arbor, MI 48109-1220
United States
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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