Urban Decline and Durable Housing

Posted: 29 Mar 2005

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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Abstract

Urban decline is not the mirror image of growth, and durable housing is the primary reason the nature of decline is so different. This paper presents a model of urban decline with durable housing and verifies these implications of the model: (1) city growth rates are skewed so that cities grow more quickly than they decline; (2) urban decline is highly persistent; (3) positive shocks increase population more than they increase housing prices; (4) negative shocks decrease housing prices more than they decrease population; (5) if housing prices are below construction costs, then the city declines; and (6) the combination of cheap housing and weak labor demand attracts individuals with low levels of human capital to declining cities.

Suggested Citation

Glaeser, Edward L. and Gyourko, Joseph E., Urban Decline and Durable Housing. Available at SSRN: https://ssrn.com/abstract=678866

Edward L. Glaeser

Harvard University - Department of Economics ( email )

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Joseph E. Gyourko (Contact Author)

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