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Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010

Author

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  • Gabriel M. Ahlfeldt

    (London School of Economics and Political Science and Centre for Economic Policy Research)

  • Daniel P. McMillen

    (University of Illinois at Urbana-Champaign)

Abstract

Abstract Despite unprecedented vertical growth in large cities, the economics of skyscrapers remain understudied. We combine data on tall buildings with a panel of land prices covering 140 years to analyze the determinants of urban heights. We provide estimates of the land price elasticity of height, the height elasticity of construction cost, and the elasticity of substitution between land and capital for tall buildings. The land price elasticity of height increased substantially over time, and it is larger for commercial than for residential buildings, which suggests that the supply side helps to produce the typical segregation of urban land uses.

Suggested Citation

  • Gabriel M. Ahlfeldt & Daniel P. McMillen, 2018. "Tall Buildings and Land Values: Height and Construction Cost Elasticities in Chicago, 1870–2010," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 861-875, December.
  • Handle: RePEc:tpr:restat:v:100:y:2018:i:5:p:861-875
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00734
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Technology of Tall (Part III): Getting to the Core
      by Jason Barr in Skynomics Blog on 2019-10-23 12:27:08

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    Cited by:

    1. Gabriel M. Ahlfeldt & Volker Nitsch & Nicolai Wendland, 2019. "Ease Versus Noise: Long-Run Changes in the Value of Transport (Dis)amenities," CEP Discussion Papers dp1631, Centre for Economic Performance, LSE.
    2. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    3. Ahlfeldt, Gabriel & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease vs. noise: Long-run changes in the value of transport (dis)amenities," CEPR Discussion Papers 13811, C.E.P.R. Discussion Papers.

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