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A simple model of city crowdedness

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  • Jordan Rappaport

Abstract

Population density varies widely across U.S. cities. A calibrated general equilibrium model in which productivity and quality-of-life differ across locations can account for such variation. Individuals derive utility from consumption of a traded good, a nontraded good, leisure, and quality-of-life. The traded and nontraded goods are produced by combining mobile labor, mobile capital, and non-mobile land. An eight-fold increase in population density requires an approximate 50 percent productivity differential or an approximate 20 percent compensating differential. A thirty-two-fold increase in population density requires an approximate 95 percent productivity differential or a 33 percent compensating differential. Empirical evidence suggests productivity and quality-of-life differentials of this magnitude are plausible. The model implies that broad-based technological progress can induce substantial migration to localities with high quality-of-life.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 04-12.

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Date of creation: 2004
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Handle: RePEc:fip:fedkrw:rwp04-12

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Keywords: Productivity ; Population ; Quality of life ; Cities and towns;

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References

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Cited by:
  1. Jordan Rappaport, 2006. "Consumption amenities and city crowdedness," Research Working Paper RWP 06-10, Federal Reserve Bank of Kansas City.
  2. Jordan Rappaport, 2004. "Moving to Nice Weather," Econometric Society 2004 North American Summer Meetings 188, Econometric Society.

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