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A simple model of city crowdedness

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Jordan Rappaport

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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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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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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jordan Rappaport, 2003. "Moving to nice weather," Research Working Paper RWP 03-07, Federal Reserve Bank of Kansas City. [Downloadable!]
    Other versions:
  2. Jordan Rappaport, 2006. "Consumption amenities and city crowdedness," Research Working Paper RWP 06-10, Federal Reserve Bank of Kansas City. [Downloadable!]
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