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on Urban Economics and Policy |
| By: | Bruneel, Christophe; Chapelle, Guillaume; Eymeoud, Jean Benoit; Wasmer, Etienne |
| Abstract: | A puzzle is that price-to-rent ratios in the housing market vary a lot in time and space, even after accounting for differences in local discount rates or rent growth differences. We propose a variant of asset pricing equations for housing markets that include a price gradient in space. It is analogous to the transport equation in physics and generates a new range of solutions consistent with the facts. The rationale for the price gradient in the asset pricing equation is the existence of spatial search frictions for housing. It is supported by the data analysis of a large urban area, Paris region. |
| JEL: | R31 G12 D83 C61 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19956 |
| By: | Chen, Ziyang; Combes, Pierre-Philippe; Démurger, Sylvie; Liu, Xiuyan |
| Abstract: | We document variations in real income for high-skilled, low-skilled, and rural migrant households across Chinese cities. Using comprehensive data on land parcel transactions along with individual data for land development and household expenditure, we construct a city-specific housing cost index and assess how it varies across locations. All three components of housing costs –unit land prices, land share in construction, and housing share in expenditure– decrease from city centres to the periphery, increase with city population, and decrease with city land area, as predicted by theory. Overall, housing costs in China are high and vary widely between locations. While income gains outweigh housing costs when moving from smaller to larger cities, in the largest cities, housing costs begin to dominate, particularly for low-skilled and rural migrant households. This suggests a bell-shaped relationship between real income and city population in China, aligning with theoretical predictions. |
| Keywords: | Housing costs; Income disparities; Land use regulation; City size; Quality of life; Agglomeration economies; China |
| JEL: | O18 R21 R23 R31 R52 O53 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20011 |
| By: | Chen, Yujiang River; Teulings, Coen |
| Abstract: | The high return to human capital on GDP per capita, reaching up to 50% in simple cross country or region regressions, is puzzling. We develop a spatial model with both rural regions and cities. Both human capital and the concentration of employment in city centers drive knowledge spillovers. Regional land prices clear the market for inter-regional labor mobility, leading to joint predictions for the public return to human capital and land prices. We test the model using data on wages and real-estate prices for 47 U.S. rural areas and 34 CMSAs from 1979 to 2015. We find that the public return on wages is 30% of the private return in rural regions, rising to 150% in cities. The total (public + private) return to human capital on GDP per capita is 20%. Increased knowledge spillovers account for the full real wage growth and for most of the increase in house prices in this period. Regional sorting of human capital and the city form each account for 15% of GDP. |
| Keywords: | Agglomeration externalities; Cities; Regional house prices; Spatial sorting; Public return to human capital |
| JEL: | J24 J31 I26 R12 R13 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20201 |
| By: | Gaubert, Cecile; Robert-Nicoud, Frédéric |
| Abstract: | We propose a spatial equilibrium model with heterogeneous households holding general non-homothetic preferences over tradable goods and housing. In equilibrium, desirable and productive locations command high housing prices. So long as housing is a necessity, these locations are disproportionately inhabited by high-income earners who are relatively less affected by high housing prices. We clarify how this source of sorting complements other potential sorting forces in spatial equilibrium models, namely, comparative advantage in production and heterogeneous preferences for locations. We show how to measure changes in welfare inequality across income groups in a theoretically-consistent way when housing is a necessity, extending the approach popular in models with homothetic preferences. We use our framework to track the evolution of welfare inequality between college and non-college graduates in the United States between 1980 and 2020. We find that, accounting for change in prices, it has risen by more than nominal wage inequality, even as college graduates increasingly sort into cities with expensive housing over this time period. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20094 |
| By: | Davide Martino; Francesco Zambonin; Nuve Yazgan |
| Abstract: | Europe faces a dual challenge: the climate crisis and a persistent housing crisis, both of which converge in the urgent need to renovate aging urban housing stock. While energy-efficient renovations are essential to meet EU carbon neutrality targets by 2050, they risk triggering “renovictions”, the displacement of vulnerable residents due to rising rents and property values. This policy study shows how these renovictions can be avoided. We summarise scientific literature and survey best practices and cautionary tales from three cities across Europe: Amsterdam, Athens, and Paris. These are three large capitals, with historic centres protected by heritage status, and facing the pressure of (over)tourism. We recommend that tenants should not pay for renovations, and identify alternative sources of funding for different types of housing. The overall principle is that any money entering the housing sector should remain in the housing sector. Our recommendations are intended for policymakers at the local and European level. Local administrations should learn from each other, replicating successful policies like one-stop-shops to accompany renovations. The EU should use the policy levers that it already has to coordinate and facilitate policies at local level, namely by simplifying existing funding options or setting up publicly backed loan guarantees.Incremental, locally adapted policies—supported by EU coordination—are essential to ensure that the green transition in housing does not come at the expense of social justice. Policymakers must act to make European cities both sustainable and inclusive for all residents. |
| Date: | 2026–07–20 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/412228 |
| By: | Katherine Cuff; Nicolas Marceau; Reyhaneh Nikoonejad; Bradley Ruffle |
| Abstract: | We develop a model of monopolistic competition in the rental housing market for low-income households with endogenous tenancy default. Identical suppliers choose the number of rental units to supply and the rental price to charge to maximize expected profits. Potential tenants who differ in their incomes and face an uninsurable income risk choose whether to engage in a costly search for rental housing. If they search and find a rental unit, then they must commit to a rental agreement before their income uncertainty is resolved. Consequently, some tenants may default on their rental payments. We show that tenancy default can explain persistent excess demand in the low-income rental housing market without any government price regulations, and that such excess demand can lead to nonstandard effects of government regulations. We also test whether the excess-demand equilibrium is behaviorally plausible by designing a laboratory experiment. Our experimental results reveal that, with feedback and repetition, the excess-demand equilibrium that requires landlord participants to restrict supply is no more difficult for participants to reach than a market-clearing equilibrium. |
| Keywords: | tenancy default; excess demand; rental housing policies; market experiment |
| JEL: | R21 R31 R38 D41 C91 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:mcm:deptwp:2026-05 |
| By: | Redding, Stephen |
| Abstract: | The recent development of quantitative urban models provides a new set of tools for evaluating transport improvements. Conventional cost-benefit analyses are typically undertaken in partial equilibrium. In contrast, quantitative urban models characterize the spatial distribution of economic activity within cities in general equilibrium. We compare evaluations of a transport improvement using conventional cost-benefit analysis, sufficient statistics approaches based on changes in market access, and model-based counterfactuals. We show that quantitative urban models predict a reorganization of economic activity within cities in response to a transport improvement, which can lead to substantial differences between the predictions of these three approaches for large changes in transport costs. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20021 |
| By: | Bo Li |
| Abstract: | During the 1999-2019 U.S. housing cycle, three empirical facts present a puzzle: in the boom period, the correlation between income growth and mortgage growth is (1) negative across ZIP codes within a metropolitan area, but (2) positive across metropolitan areas, and (3) the metropolitan areas that experience the worst bust also show the strongest recovery. I develop a unified credit expansion theory that explains both within- and cross-metro patterns in the prior, boom, bust, and recovery periods (including the three facts above) and generates new testable implications of ``double differences" (cross ZIP codes and cross metros) for the four periods. Following the idea of ``Economic Base Theory", I construct local economic exposure to net export growth as the driving force of local economy and credit expansion. For the identification strategy, I use a new instrumental variable approach from the International trade literature for the following empirical results. First, I show that high-net-export-growth metros experience a stronger boom-bust-recovery housing cycle due to credit expansion in private-label mortgages (PLMs), rather than in government-sponsored enterprise mortgages (GSEMs), because only the former can legally respond to local economic conditions. Second, for the ``double differences", I define a low-minus-high (LMH) factor as the private-label mortgage (and house price) growth in low-income ZIP codes minus that in high-income ZIP codes within the same metropolitan area. I show that this low-minus-high factor (as a measure of credit expansion) in the high-net-export-growth metros is more positive during the boom period, more negative during the bust period, and slightly more positive in the recovery period than in the low-net-export-growth metros. Lastly, I employ five tests to demonstrate that ``speculation" is unlikely to play a dominant role in this housing cycle. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.12205 |
| By: | Basco, Sergi; Rosés, Joan R. |
| Abstract: | The economic impact of pandemics is commonly studied using theoretical models that assume constant returns to scale and no factor movements. This article argues that a new economic geography model with increasing returns to scale and capital mobility better explains the effects of pandemics in modern economies. Our model predicts that pandemics shape where investments are made, leading to long-term impacts on economic development. To test this, we examine the consequences of the Great Influenza Pandemic on credit allocation and structural transformation in Spain from 1915 to 1929. Our research shows that credit growth was lower in regions with high mortality. Quantitatively, a one standard deviation increase in flu-driven mortality decreases credit (per capita) by 13.6%. We also document that this flu-driven reallocation of credit resulted in an increase in relative urban GDP in low-mortality-rate regions. A one standard deviation increase in flu-driven credit raises relative urban GDP by 9.5%. |
| JEL: | E32 N10 N30 N90 O11 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20232 |
| By: | Léonard Moulin; Priya Maurya |
| Abstract: | Whether private schools raise achievement or reflect selection remains an open question. Using a national panel of 15, 188 French children followed from first grade to the end of primary school, with standardized mathematics and French assessments at both points, we estimate the effect of attending a publicly funded private school throughout primary school. Private-school students outperform their public-school peers at both school entry and the end of primary school. We compare three complementary identification strategies: a value-added specification controlling for baseline achievement and family background, an instrumental-variables strategy exploiting local private-school supply, and within-student comparisons of sector switchers. Accounting for selection eliminates the French advantage and reduces the mathematics advantage by about three quarters, leaving an estimated effect of 0.080 standard deviations. The value-added and instrumental-variable estimates point to the same conclusion, with the former estimated much more precisely. Sector switchers reveal a distinct selection pattern: more advantaged families move initially lower-achieving children into the private sector, and these children finish primary school ahead of comparable public-school students. The only consistent exception arises in large urban markets, where mathematics effects remain positive across specifications, although these are also the settings in which both admissions discretion and potential threats to the instrumental-variable strategy are likely to be greatest. Overall, most of the observed private-school advantage reflects selection rather than school effectiveness, although effects may differ across local education markets. |
| Keywords: | Private schools, Primary education, Student achievement, School choice, Panel data, France, ECOLE / SCHOOLS, REUSSITE SCOLAIRE / EDUCATIONAL ACHIEVEMENT, ENSEIGNEMENT PRIMAIRE / PRIMARY EDUCATION, ENSEIGNEMENT PRIVE / PRIVATE EDUCATION, FRANCE / FRANCE, ENSEIGNEMENT PUBLIC / PUBLIC EDUCATION |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:idg:wpaper:t78b1p8bjehto0i1dryp |
| By: | Fouka, Vasiliki; Serlin, Theo |
| Abstract: | How does economic modernization affect group identity? Modernization theory emphasizes how labor migration led to the adoption of common identities. Yet economic development may reduce incentives to emigrate, preserving local cultures. We study England and Wales during the Second Industrial Revolution, a period characterized by the development of new industries and declines in transportation and communication costs. Using microdata on individuals’ names and migration decisions, we quantify identity change and its variation across space. We develop and estimate a quantitative spatial model in which migration and cultural identities are inter-dependent. Different components of economic modernization had different effects on identity change. Falling migration costs homogenized peripheral regions. In contrast, industrial development led to heterogeneity, increasing the overall prevalence of the culture of London, while also creating local identity holdouts by reducing out-migration from industrializing peripheries. Modernization promotes both national identities and persistent local identities in peripheral regions that industrialize. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20193 |
| By: | Madhok, Raahil; Noack, Frederik; Mobarak, Ahmed; Deschenes, Olivier |
| Abstract: | This paper studies how agricultural production responds to the loss of agricultural labor during the process of urbanization and structural transformation. Using household microdata from India and exogenous variation in migration opportunities induced by urban income shocks, we show that agricultural households do not systematically replace lost labor with increased capital. Instead, they cultivate less land and lower their use of agricultural technology, reducing crop production. Changing land and crop prices induce non-migrant households to expand agricultural investments and production. In aggregate, market adaptation mitigates over three-fourths of the direct agricultural losses from urbanization. Spatial reorganization moves food production from land near urban areas toward more remote areas with lower emigration. |
| Keywords: | India |
| JEL: | O13 O15 Q15 Q16 R11 R12 J43 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20241 |
| By: | Oliver Skultety (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Jan Zalman (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | This paper studies the capitalization of property taxes into housing prices by exploiting a unique institutional setting. We utilize a nationwide reform that raised the statutory base rate of the property tax by 80% while simultaneously restricting the fiscal instruments municipalities could use to mitigate the hike. Exploiting a population-based discontinuity in tax rates, we deploy a difference-in-discontinuities design to jointly identify municipal tax-setting behavior and asset price capitalization. We show that prior to the reform, municipalities aggressively used local coefficients to offset statutory rates. Following the reform, however, local governments failed to utilize their remaining discretionary tools to offset the tax increase, leaving residents with a higher effective tax burden. Despite this substantial fiscal shock, we find no evidence that the resulting tax wedge is capitalized into housing prices. Our findings demonstrate that accounting for endogenous municipal responses to nationwide policy shocks is vital for accurately evaluating the economic incidence of property taxation. |
| Keywords: | Property tax, municipal tax-setting, tax competition, capitalization |
| JEL: | H71 H73 H22 R21 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_21 |
| By: | Marina Gómez-García (Universidad Autónoma de Madrid and Banco de España) |
| Abstract: | This paper estimates the causal impact of air pollution on housing prices in Madrid, a large European city with relatively high and persistent nitrogen dioxide (NO2) concentrations and a home ownership rate of around 70%. Using location-specific data on pollution levels and the universe of housing transactions, my estimation controls for house and neighborhood characteristics, year and neighborhood fixed effects, a bad weather index and a set of time-varying neighborhood characteristics. To address endogeneity concerns, I make use of quasi-experimental variation in nitrogen dioxide levels resulting from temperature inversions. The results suggest that a 10% increase in air pollution reduces housing prices by 0.65% (around €1, 327 for the average house). This effect is robust to alternative measures of air pollution, different bad weather indices and the inclusion of seasonality dummies, and is highly non-linear, being larger for higher levels of pollution. |
| Keywords: | air pollution, housing market, valuation of environmental effects |
| JEL: | Q53 R31 Q51 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2624e |
| By: | Ioannides, Yannis; Ngai, Liwa Rachel |
| Abstract: | We approach the literature on housing and inequality from two angles. One is the impact of unequal endowments on housing. The second is the "memberships" inequality associated with neighborhoods, namely, households' location in a geographic and social context. We elaborate on these two angles of inequality and focus on three distinctive features of housing: consumption, capital and location. For owner-occupants, capital and consumption are bundled together in a single good. For both renters and owner-occupants, housing consumption inequality, access to good neighborhoods, and housing wealth follow from unequal endowments. Housing can propagate inequality by enabling owner-occupants to use it as collateral for other investments, or secure higher returns to human capital investments through the better schools in better neighborhoods. We use this approach to analyse key aspects of housing and inequality, paying special attention to the impacts of racial discrimination and segregation. |
| Keywords: | Inequality; housing consumption; Housing wealth; housing location |
| JEL: | R3 E2 D3 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19907 |
| By: | Tomohiro Hirano; Alexis Akira Toda |
| Abstract: | We analyze how equilibrium housing prices are determined along with economic development in an overlapping generations model with perfect housing and rental markets, in which housing prices and rents are both endogenous. We focus on demand-side factors: home buyers income and the elasticity of substitution between consumption and housing. We characterize the long-run rent growth rate in all equilibria and show that, when this elasticity exceeds one (the empirically relevant case), rents grow more slowly than income. The economy then exhibits a two-stage phase transition in the income ratio of home buyers relative to home sellers. When this ratio is low, only fundamental equilibria exist. Above a first threshold, fundamental and bubbly equilibria coexist and the outcome is selected by self-fulfilling expectations. Above a second threshold, fundamental equilibria cease to exist and housing bubbles are necessary for equilibrium. We further prove that the fundamental equilibrium is always unique and the bubbly equilibrium is unique whenever the elasticity of intertemporal substitution is not far below 1/2. Uniqueness lets us study expectation-driven booms: if agents anticipate future income growth, housing prices rise and contain a bubble today even when current incomes lie in the fundamental region, with the price-income and price-rent ratios rising together. Finally, contrary to the common understanding that land eliminates dynamic inefficiency in overlapping generations models, we show that inefficient equilibria arise robustly, and only for intermediate income ratios. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:cnn:wpaper:26-011e |
| By: | Franklin, Simon |
| Abstract: | The case for government supply of housing hinges on two key questions: do intended beneficiaries value it more than the cost to the state of providing it, and does relocation to remote housing sites impose unintended costs for movers or society? I study a large-scale lottery in Addis Ababa, Ethiopia, which randomly assigned slum residents to housing on the city’s outskirts. Leveraging eight years of low-attrition panel survey data alongside market rents, construction costs, and land values, I find that willingness to pay exceeds per-unit production costs for a substantial share of slum households. There is no evidence that housing negatively affects labour market outcomes, education, or household consumption— suggesting that there are neither unanticipated drawbacks for movers nor broader negative externalities. Multiple surveys allow me to track how households adjust to moves and how new mega-neighbourhoods evolve. Although social networks and neighbourhood amenities initially deteriorate for winners, they significantly improve after 8 years. The results differ significantly by randomly assigned location, implying a weaker case for centrally located housing given its higher cost relative to benefits. |
| Keywords: | Housing demand; Neighbourhoods; Market access; public housing; Slums |
| JEL: | I38 O18 R23 R21 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19944 |
| By: | Wahl, Fabian |
| Abstract: | The German Peasants’ War, the largest popular uprising in Europe before the French Revolution, has been widely studied by historians, but its long-term regional effects remain unexplored quantitatively. This paper offers the first systematic analysis by examining urban development in conflict-affected areas using data on economic construction from 1225 to 1825 drawn from the Deutsches Städtebuch. Using differencein- differences and event study methods, I find a significant and lasting decline in construction activity in the conflict zone–driven by the southern region, with no significant effect in the north. Placebo tests using alternative war geographies confirm the robustness of the results. These findings underscore the persistent negative effects of civil conflict on regional economic development. I provide suggestive evidence that this decline was linked to reduced presence of upper-tail human capital and political elites, pointing to disrupted local political and educational infrastructure as a mechanism behind the long-run urban stagnation. |
| Keywords: | Urban development; Difference-in-differences |
| JEL: | N13 N44 N93 O18 D31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20231 |
| By: | Troost, Agata Anita; van Duijn, Mark |
| Abstract: | Housing affordability pressures are increasingly recognised as a key determinant of mental well-being, yet existing research largely focuses on individual or household-level cost burdens, omitting the spatial context. This paper argues that housing market pressures are subject to regional market dynamics, shaping mental health in addition to individual housing affordability stress. We examine how regional housing affordability strain is associated with mental health in the Netherlands by combining LISS Panel survey data with geo-coded administrative data from Statistics Netherlands. We use a novel rank-based measure of regional price-income mismatch to capture the relative position of households within regional housing markets. Regression results show that regional housing market pressure is negatively associated with mental health in 2023, although no comparable association is found in 2018. The 2023 relationship persists after controlling for individual characteristics and household-level affordability stress. These findings suggest that the mental health consequences of the housing crisis extend beyond individual cost burdens, highlighting the importance of regional housing market dynamics as an independent source of stress. |
| Date: | 2026–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:8yuwv_v2 |
| By: | Desmet, Klaus; Parro, Fernando |
| Abstract: | We examine the recent literature that studies the spatial distribution of economic activity across both space and time. We discuss the methodological advances enabling the incorporation of dynamic forces of economic activity---such as endogenous innovation, forward-looking location choices, capital and asset accumulation, idea diffusion, and stochastic fundamentals---into frameworks with many heterogeneous locations and a rich economic geography. These frameworks remain tractable for quantitative evaluations. We also discuss the wide range of empirical questions explored in recent work through the lens of these frameworks, including the global and local economic impacts of climate change, the dynamic effects of trade and migration policy, labor market adjustments to import competition, the spatial consequences of structural change, the dynamic effects of place-based policies, and the long-run spatial effects of large-scale infrastructure projects. |
| JEL: | F10 F16 F22 O11 O18 O33 R11 R12 R23 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19931 |
| By: | Conti, Laura; Francesconi, Marco; Papini, Giulio; Serafinelli, Michel |
| Abstract: | This paper shows how the local labor market (LLM) responds to changes in touristic attractiveness, leveraging a unique classification of Italian localities based on their main touristic assets and aggregate trends in foreign tourists' choices in a shift-share research design. Looking at all LLMs, we find a strong positive relationship between changes in attractiveness and changes in the local tourism-related economic activity, tourism expenditure, and tourism employment, but no effect on total employment. In high-unemployment LLMs, however, we find a sizable overall employment effect and large indirect effects generated through industries related to tourism and firms in the nontradable sector. |
| Keywords: | Tourism; Unemployment; Heterogeneity |
| JEL: | R11 J21 R12 R23 Z30 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20281 |
| By: | Rossi-Hansberg, Esteban; Zhang, Jialing |
| Abstract: | We use high-resolution spatial data to build a novel global annual gridded GDP dataset at 1°, 0.5°, and 0.25° resolutions from 2012 onward. Our random forest model trained on local and national GDP achieves an R² above 0.92 for GDP levels and above 0.62 for annual changes in regions left out of the training sample. By incorporating diverse indicators beyond population and nighttime lights, our estimates offer more precise subnational GDP measurements for analyzing economic shocks, local policies, and regional disparities. We evaluate the precision of our estimates with a sample case of COVID-19’s impact on local GDP in China. |
| JEL: | E0 F0 R0 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20023 |
| By: | Damen, Sven; Korevaar, Matthijs; Van Nieuwerburgh, Stijn |
| Abstract: | Residential properties with the lowest rent levels provide the highest investment returns to their owners. Using detailed rent, cost, and price data from the United States, Belgium, and The Netherlands, we show that this phenomenon holds across housing markets and time. If anything, low-rent units hedge business cycle risk. We also find no evidence for differential regulatory risk exposure. We document segmentation of investors, with large corporate landlords shying away from the low-tier segment possibly for reputational reasons. Financial constraints prevent renters from purchasing their property and medium-sized landlords from scaling up, sustaining excess risk-adjusted returns. Low-income tenants ultimately pay the price for this segmentation in the form of a high rent burden. |
| JEL: | G5 R2 R3 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20061 |
| By: | Woo-Kyoung Song (Korea Institute for Industrial Economics and Trade); Sung-min Cho (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Five years have passed since the South Korean government designated several regions as “depopulation regions and at-risk areas” and began implementing policies to combat what it refers to as “local extinction” in earnest. Later this year, the government is required by statute to re-identify and designate depopulation regions once more, and so attention has turned to the institutional reforms needed to make anti-extinction policies more effective.<p> The government has moved quickly to build the legal scaffolding needed to buttress its policy apparatus: it formally designated several areas as depopulation regions and the National Assembly passed the Special Act on Support for Depopulation Regions, established a KRW 10 trillion Local Extinction Response Fund, and also formulated a basic plan that lays out its approach to addressing the country’s population crisis.<p> Building on the central government’s framework, local governments have autonomously made creative efforts to fight population decline that are beginning to bear fruit. Yet despite some small victories, many challenges remain: the various related plans require closer linkages; deeper coordination between central and local government; project planning that focuses on where people actually live; increased participation by outside organizations; more “software” (i.e., local community programs and services) projects that enhance residential quality-of-life, and incentives for areas to “graduate” from the program.<p> This study finds that since policy took effect, regions suffering from population decline have posted gains in population growth, employment, and youth employment. They are also more financially independent and autonomous. In designated areas, population size and the population growth rate correlate strongly with the employment rate, the youth employment rate, the number of workers, and the number of manufacturing and service establishments. Projects that upgrade and diversify regional industrial structures tend to improve population trends, and therefore warrant more active planning and implementation efforts. |
| Keywords: | balanced regional development; depopulation; Special Act on Support for Depopulation Regions; Local Extinction Response Fund; in-country migration; regional migration; local extinction; population los |
| JEL: | R58 R23 R11 J11 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kietrp:023248 |
| By: | Lindenlaub, Ilse; Oh, Ryungha; Peters, Michael |
| Abstract: | Using administrative data from Germany, we document that high-wage locations have substantially lower labor shares and higher wage dispersion. We show that a parsimonious model, in which firm monopsony power stems from search frictions in local labor markets, can explain these facts as long as “superstar†firms sort into productive locations. This positive sorting, which emerges as the unique equilibrium if firm and location productivity are sufficient complements or labor market frictions are sufficiently large, steepens the local wage ladder in productive locations and leads to not only higher wages, but also greater wage inequality. At the same time, positive firm sorting reduces local labor shares in prosperous places because more productive firms have more monopsony power. Our estimated model indicates that firm sorting can rationalize the lower local labor shares in regions with endogenously higher wages and can account for 40% of their increased wage dispersion. In spatial firm sorting, we thus highlight a new source of disparities in local labor market outcomes. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19958 |
| By: | Yu-Hsin Ho; Chang-Tai Hsieh; Wen-Tai Hsu; Yu-Jhih Luo |
| Abstract: | We study how residential-commercial zoning affects the allocation of urban space. Using property-level data from Taipei and 34 U.S. metropolitan areas, we infer neighborhood-level zoning wedges from the allocation of residents, workers, and floor space. We find substantially greater dispersion in these wedges in U.S. cities than in Taipei, where mixed-use development is pervasive. The inferred wedges increase neighborhood specialization and reduce welfare. We then evaluate whether zoning is aligned with the neighborhood characteristics that would justify intervention. Although zoning is systematically related to comparative advantage, comparative advantage explains only a small fraction of the variation in zoning. The dominant effect of zoning in American cities is therefore not to promote efficient land use, but to increase the segregation of residential and commercial activity across neighborhoods. |
| JEL: | D61 R13 R52 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35455 |
| By: | Coelli, Federica; Pelzl, Paul |
| Abstract: | Using oil and gas shocks as an exogenous source of business cycles at the U.S. commuting zone level, we provide novel evidence that local booms increase local patenting, especially in non-metropolitan areas. This reflects agglomeration economies that make incumbent inventors more productive. In contrast to total patenting, innovation in oil and gas — the sector closest to the boom — is countercyclical, consistent with higher opportunity costs of innovation in a booming industry. Our findings shed new light on the spatial dimension of innovation, inform recent debates on place-based industrial policy, and help to reconcile mixed evidence on the cyclicality of innovation. |
| Keywords: | Innovation |
| JEL: | L71 O12 O31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20317 |
| By: | Auerbach, Jan; Keller, Elisa; Neira, Julian; Singhania, Rish |
| Abstract: | Foreign-born and US-born workers sort differently across space. This paper examines how spatial sorting affects US productivity by disentangling the roles of worker productivity and local amenities. Using data on labor market outcomes and new measures of user cost of capital across regions, we identify spatial distributions of local amenities and productivity by worker birthplace, including birth state for US-born workers, in a general form under minimal assumptions. We use a productivity decomposition as a diagnostic tool to isolate channels through which immigration contributes to aggregate TFP. The decomposition applied to US Census data from 1980 to 2018 reveals that amenity-induced spatial sorting is the primary driver of TFP gains from immigration, with the largest share coming from foreign-born workers mitigating the birth-state bias of US-born workers. Counterfactual exercises show that the birth-state-bias-mitigation channel accounts for at least 90% of TFP gains from immigration. |
| Keywords: | Productivity; Spatial sorting |
| JEL: | O4 E24 J24 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20197 |
| By: | Tian, Yixin; Shanoyan, Aleksan |
| Abstract: | Economic theory suggests that processor concentration typically harms agricultural producers through buyer monopoly power. However, long-run models indicate that highly concentrated processors may act as a buffer during severe supply chain disruptions. The low water levels on the Mississippi River in the fall of 2022 led to a significant decline in barge capacity, disrupting export channels for inland farms. This provided a natural experiment to test this theoretical trade-off. Using weekly county-level panel data on corn basis differentials across seven U.S. states during harvest weeks from 2018 to 2024, we employ a difference-in-differences approach to isolate the impact of local ethanol processor concentration, represented by the Herfindahl-Hirschman Index (HHI), during the shock period. The model strictly controls for distance from the Mississippi River and local drought severity to ensure that the HHI mechanism operates independently. We find strong evidence of a buffering effect: during the crisis, a 5, 000-point increase in the HHI was associated with an increase of approximately $0.04 per bushel in the basis. This effect exhibits significant spatial heterogeneity: it is dominant in states deep inland (Kansas, NorthDakota, SouthDakota, Nebraska); in river in estates (Missouri, Oklahoma, Texas), the basis is primarily influenced by distance from the river. However, tests of the transmission mechanism using farm-level panel data from Kansas indicate that this loca lprice buffer did not translate into higher net farm income. In particular, for corn-dependent farms, drought-induced yield losses ultimately offset the price gains from the basis phase. Ultimately, these findings provide key parameters regarding the benefits of price buffering that are currently missing from the antitrust framework. This suggests that highly concentrated processors in inland regions actually serve as a critical regional buffer. Antitrust policymakers should consider the positive impact of processor concentration on supply chain resilience, especially in the inland states. |
| Keywords: | Agribusiness |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404321 |