Urban Population and Amenities: The Neoclassical Model of Location

32 Pages Posted: 22 May 2020

See all articles by David Albouy

David Albouy

University of Illinois at Urbana-Champaign

Bryan A. Stuart

George Washington University - Department of Economics

Date Written: February 2020

Abstract

We develop a neoclassical general equilibrium model to explain cross‐metro variation in population and density. We provide new methods to estimate traded and nontraded productivities, and elasticities of housing and land supply, using density and land area data. From wage and housing cost indices, the model explains half of U.S. density and population variation and finds that quality of life determines location choices more than trade productivity; productivity and factor substitution in housing matter most, but are weak in nicer areas. Relaxing land use regulations would increase population in the West, raising both quality of life and productivity experienced by residents.

Suggested Citation

Albouy, David and Stuart, Bryan A., Urban Population and Amenities: The Neoclassical Model of Location (February 2020). International Economic Review, Vol. 61, Issue 1, pp. 127-158, 2020, Available at SSRN: https://ssrn.com/abstract=3602117 or http://dx.doi.org/10.1111/iere.12419

David Albouy (Contact Author)

University of Illinois at Urbana-Champaign ( email )

Bryan A. Stuart

George Washington University - Department of Economics ( email )

United States

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