What are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values
University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)
NBER Working Paper No. w14981
An equilibrium model predicts that inter-city differences in firm productivity, and the full value of local amenities cannot be inferred without land values. These may be inferred from ordinary wage and housing-cost data using the housing-cost function if housing-sector productivity is constant. A calibrated model predicts how quality-of-life and production amenities are capitalized differently into land values, wages, housing costs, and federal-tax payments. The total value of these amenities are estimated across U.S. cities. Wages and housing costs 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: 64
Date posted: May 26, 2009
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