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

29 Pages Posted: 15 Oct 2002

See all articles by William C. Wheaton

William C. Wheaton

Massachusetts Institute of Technology (MIT) - Department of Economics

Date Written: March 2002

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.

Keywords: Job Decentralization

JEL Classification: R14

Suggested Citation

Wheaton, William C., Commuting, Ricardian Rent and House Price Appreciation in Cities with Dispersed Employment and Mixed Land Use (March 2002). MIT Department of Economics Working Paper No. 02-35. Available at SSRN: https://ssrn.com/abstract=339482 or http://dx.doi.org/10.2139/ssrn.339482

William C. Wheaton (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-252B
Cambridge, MA 02142
United States
617-253-1723 (Phone)
617-253-1330 (Fax)

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