Impacts of Central Business District Location: A Hedonic Analysis of Legal Service Establishments

29 Pages Posted: 29 Jul 2011

See all articles by Frank Limehouse

Frank Limehouse

Chicago Census Research Data Center; U.S. Census Bureau - Center for Economic Studies

Robert E. McCormick

Clemson University - John E. Walker Department of Economics; PERC

Date Written: July 1, 2011

Abstract

This analysis examines the business impacts on law firms of locating in Central Business Districts (CBDs) in major U.S. cities. Specifically, we measure the price premium that law firms pay to locate in CBDs. Using micro-level data from the 1992 and 2007 Census of Services, we find that after controlling for firm size, firm specialization characteristics, and MSA and county attributes, law firms within CBDs pay about 15 to 20 percent more in overhead compared to those firms outside CBDs – a result consistent across time between 1992 and 2007. When including an important additional measure of firm quality, however, we find that this impact is reduced to about 7 to 9 percent, but still statistically significant. Additional results show that there is a significant correlation between firm quality and CBD location. We also find that firm size and firm specialization measures are important factors in the choice to locate within CBDs. We argue that these results indicate that CBD location for law firms may serve as networking, quality sorting, and branding mechanisms.

Suggested Citation

Limehouse, Frank and McCormick, Robert E., Impacts of Central Business District Location: A Hedonic Analysis of Legal Service Establishments (July 1, 2011). US Census Bureau Center for Economic Studies Working Paper No. CES 11-21. Available at SSRN: https://ssrn.com/abstract=1898137 or http://dx.doi.org/10.2139/ssrn.1898137

Frank Limehouse (Contact Author)

Chicago Census Research Data Center ( email )

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Chicago, IL 60657
United States

U.S. Census Bureau - Center for Economic Studies ( email )

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Washington, DC 20233
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Robert E. McCormick

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States
8645062224 (Phone)

HOME PAGE: http://sixmile.clemson.edu

PERC ( email )

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HOME PAGE: http://www.perc.org

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