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What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values

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David Albouy

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Abstract

Estimates of local land rents and firm productivity from wage and housing-cost data should incorporate parameters from the housing production function. Across cities, differences in amenity values are capitalized into the sum of local land values and federal-tax payments. Improved modeling is used to predict how amenities affect wages and housing costs, estimate quality-of-life and firm-productivity differences across U.S. cities, and revise estimates of the value of public infrastructure investments. Land values vary mainly from quality-of-life differences, while total city values vary mainly from firm-productivity differences. The most valuable cities are generally coastal, sunny, and have large or well-educated populations.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14981.

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Date of creation: May 2009
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Handle: RePEc:nbr:nberwo:14981

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Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue
H4 - Public Economics - - Publicly Provided Goods
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
R1 - Urban, Rural, and Regional Economics - - General Regional Economics

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