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An urban overhead? Crime, agglomeration, and amenity

Author

Listed:
  • Stuart Donovan

    (Vrije Universiteit Amsterdam)

  • Thomas de Graaff

    (Vrije Universiteit Amsterdam)

  • Henri L.F. de Groot

    (Vrije Universiteit Amsterdam)

  • Aaron Schiff

    (Schiff Consulting)

Abstract

Using data for 134 locations in New Zealand, we study the effects of crime and agglomeration on urban amenity. We find that crime has significant negative effects on the value of urban amenity, with elasticities of approximately ?0.06 for firms and ?0.09 for workers. To put this effect in context, this implies the value of urban amenity for workers is approximately 2–3 times more sensitive to crime than average temperature. More uniquely, we find that controlling for crime leads to somewhat larger estimates of agglomeration economies. Together, these results suggest that crime detracts significantly from the value of urban amenity and may also act as an urban congestion cost that serves to undermine agglomeration economies.

Suggested Citation

  • Stuart Donovan & Thomas de Graaff & Henri L.F. de Groot & Aaron Schiff, 2023. "An urban overhead? Crime, agglomeration, and amenity," Tinbergen Institute Discussion Papers 23-024/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20230024
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    File URL: https://papers.tinbergen.nl/23024.pdf
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    References listed on IDEAS

    as
    1. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2010. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: Agglomeration Economics, pages 15-66, National Bureau of Economic Research, Inc.
    2. Stuart A. Gabriel & Stuart S. Rosenthal, 2004. "Quality of the Business Environment Versus Quality of Life: Do Firms and Households Like the Same Cities?," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 438-444, February.
    3. Berger, Mark C. & Blomquist, Glenn C. & Sabirianova Peter, Klara, 2008. "Compensating differentials in emerging labor and housing markets: Estimates of quality of life in Russian cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 25-55, January.
    4. Harry Garretsen & Gerard Marlet, 2017. "Amenities and the attraction of Dutch cities," Regional Studies, Taylor & Francis Journals, vol. 51(5), pages 724-736, May.
    5. Edward L. Glaeser & Bruce Sacerdote, 1999. "Why Is There More Crime in Cities?," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 225-258, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    crime; urban development; agglomeration economies; amenity; New Zealand;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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