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Institute for Urban Research |
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TITLE:
Urban Decline and Durable Housing
AUTHOR(S):
Edward L. Glaeser, Harvard University and National Bureau of Economic Research
Joseph Gyourko, University of Pennsylvania
DOCUMENT TYPE: Journal Article
This document has been peer reviewed.
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Copyright The University of Chicago Press. Reprinted from Journal of Political Economy, Volume 113, Number 2, April 2005, pages 345-375.
SUBJECT(S):
Economics, Economic Development and Real Estate, Housing and Community Development
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.
DATE POSTED: 06 July 2006