Penn IUR Publications

Urban Decline and Durable Housing

Edward L. Glaeser, Harvard University and National Bureau of Economic Research
Joseph Gyourko, University of Pennsylvania

Document Type Journal Article

Copyright The University of Chicago Press. Reprinted from Journal of Political Economy, Volume 113, Number 2, April 2005, pages 345-375.

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

This document has been peer reviewed.