Commuting, Ricardian Rent and House Price Appreciation in Cities with Dispersed Employment and Mixed Land Use

Abstract:     
For centuries, cities have been modeled as geographically centered markets in which locational scarcity generates Ricardian Land Rent that in turn increases over time as cities grow. This paper first presents some empirical evidence that this is not the case: inflation-adjusted locational rent does not increase over time - despite enormous urban growth. Rather than trying to explain this tendency within a "monocentric" framework, this paper develops a model where jobs and commerce can be spatially interspersed with residences, under certain economic conditions. The paper presents new empirical evidence that such job dispersal does characterize at least US cities. The comparative statics of this model are much more consistent with the data - accommodating extensive urban growth with little or no increase in commuting and Ricardian Rent.

Number of Pages in PDF File: 29

Keywords: Job Decentralization

JEL Classification: R14

working papers series