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Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872

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  • Richard Hornbeck
  • Daniel Keniston

Abstract

Urban growth requires the replacement of outdated buildings, yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction. The Boston Fire of 1872 created an opportunity for widespread simultaneous reconstruction, initiating a virtuous circle in which building upgrades encouraged further upgrades of nearby buildings. Land values increased substantially among burned plots and nearby unburned plots, capitalizing economic gains comparable to the prior value of burned buildings. Boston had grown rapidly prior to the Fire, but negative spillovers from outdated durable buildings had substantially constrained its growth by dampening reconstruction incentives.

Suggested Citation

  • Richard Hornbeck & Daniel Keniston, 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872," American Economic Review, American Economic Association, vol. 107(6), pages 1365-1398, June.
  • Handle: RePEc:aea:aecrev:v:107:y:2017:i:6:p:1365-98
    Note: DOI: 10.1257/aer.20141707
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Fire and Ice: Lessons from Historical Conflagrations for Cities Today
      by Jason Barr in Skynomics Blog on 2018-10-02 13:20:18

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    8. Giuliano Masiero & Michael Santarossa, 2019. "Earthquakes, grants and public expenditure: how municipalities respond to natural disasters," IdEP Economic Papers 1901, USI Università della Svizzera italiana.
    9. José García-Montalvo & Marta Reynal-Querol, 2018. "Earthquakes and Terrorism: The Long Lasting Effect of Seismic Shocks," Working Papers 1020, Barcelona Graduate School of Economics.
    10. José Garcia Montalvo & Marta Reynal-Querol, 2018. "Earthquakes and terrorism: the long lasting effect of seismic shocks," Economics Working Papers 1599, Department of Economics and Business, Universitat Pompeu Fabra.
    11. Matthew Ranson & Lisa Tarquinio & Audrey Lew, 2016. "Modeling the Impact of Climate Change on Extreme Weather Losses," NCEE Working Paper Series 201602, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2016.
    12. Lindenthal, Thies & Eichholtz, Piet & Geltner, David, 2017. "Land assembly in Amsterdam, 1832–2015," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 57-67.
    13. Matthew Jaremski, 2020. "Today’s economic history and tomorrow’s scholars," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(1), pages 169-180, January.
    14. Montalvo, José G. & Reynal-Querol, Marta, 2019. "Earthquakes and terrorism: The long lasting effect of seismic shocks," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 541-561.
    15. Chang, Zheng & Li, Jing, 2018. "The impact of in-house unnatural death on property values: Evidence from Hong Kong," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 112-126.
    16. Divya Singh, 2020. "Do Property Tax Incentives for New Construction Spur Gentrification? Evidence from New York City," 2020 Papers psi856, Job Market Papers.
    17. Guy Michaels & Dzhamilya Nigmatulina & Ferdinand Rauch & Tanner Regan & Neeraj Baruah & Amanda Dahlstrand-Rudin, 2017. "Planning Ahead for Better Neighborhoods: Long Run Evidence from Tanzania," CESifo Working Paper Series 6680, CESifo.
    18. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    19. Kentaro Nakajima & Kensuke Teshima, 2018. "Identifying Neighborhood Effects among Firms: Evidence from Location Lotteries of the Tokyo Tsukiji Fish Market," 2018 Meeting Papers 575, Society for Economic Dynamics.
    20. Berger, Thor & Enflo, Kerstin, 2017. "Locomotives of local growth: The short- and long-term impact of railroads in Sweden," Journal of Urban Economics, Elsevier, vol. 98(C), pages 124-138.
    21. Ortega, Francesc & Taṣpınar, Süleyman, 2018. "Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market," Journal of Urban Economics, Elsevier, vol. 106(C), pages 81-100.
    22. Ioannides, Yannis M. & Zhang, Junfu, 2017. "Walled cities in late imperial China," Journal of Urban Economics, Elsevier, vol. 97(C), pages 71-88.
    23. Siodla, James, 2015. "Razing San Francisco: The 1906 disaster as a natural experiment in urban redevelopment," Journal of Urban Economics, Elsevier, vol. 89(C), pages 48-61.
    24. Ager, Philipp & Hansen, Casper Worm & Lønstrup, Lars, 2018. "Shaking Up the Equilibrium: Natural Disasters, Economic Activity, and Immigration," Discussion Papers of Business and Economics 2/2018, University of Southern Denmark, Department of Business and Economics.

    More about this item

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • N91 - Economic History - - Regional and Urban History - - - U.S.; Canada: Pre-1913
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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