Urban Decline and Durable Housing

72 Pages Posted: 17 Nov 2001 Last revised: 31 Dec 2022

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Joseph Gyourko

University of Pennsylvania - Real Estate Department; National Bureau of Economic Research (NBER)

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Date Written: November 2001

Abstract

People continue to live in many big American cities, because in those cities housing costs less than new construction. While cities may lose their productive edge, their houses remain and population falls only when housing depreciates. This paper presents a simple durable housing model of urban decline with several implications which document: (1) urban growth rates are leptokurtotic -- cities grow more quickly than they decline, (2) city growth rates are highly persistent, especially amount declining cities, (3) positive shocks increase population more than they increase housing prices, (4) negative shocks decrease housing prices more than they decrease population, (5) the relationship between changes in housing prices and changes in population is strongly concave, and (7) declining cities attract individuals with low levels of human capital.

Suggested Citation

Glaeser, Edward L. and Gyourko, Joseph E., Urban Decline and Durable Housing (November 2001). NBER Working Paper No. w8598, Available at SSRN: https://ssrn.com/abstract=291273

Edward L. Glaeser (Contact Author)

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Joseph E. Gyourko

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