Covid and Cities, Thus Far

54 Pages Posted: 5 Apr 2023 Last revised: 19 Aug 2024

See all articles by Gilles Duranton

Gilles Duranton

University of Pennsylvania - Real Estate Department

Jessie Handbury

University of Pennsylvania, The Wharton School

Multiple version iconThere are 2 versions of this paper

Date Written: April 2023

Abstract

A key reason for the existence of cities are the externalities created when people cluster together in close proximity. During Covid, such interactions came with health risks and people found other ways to interact. We document how cities changed during Covid and consider how the persistence of new ways of interacting, particularly remote work, will shape the development of cities in the future. We first summarize evidence showing how residential and commercial prices and activity adjusted at different distances from dense city centers during and since the pandemic. We use a textbook monocentric city model to demonstrate that two adjustments associated with remote work—reduced commuting times and increased housing demand—generate the patterns observed in the data. We then consider how these effects might be magnified by changes in urban amenities and agglomeration forces, and what such forces might mean for the future of cities.

Suggested Citation

Duranton, Gilles and Handbury, Jessie, Covid and Cities, Thus Far (April 2023). NBER Working Paper No. w31158, Available at SSRN: https://ssrn.com/abstract=4426939

Gilles Duranton (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Jessie Handbury

University of Pennsylvania, The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104
United States

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