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City Facts

June 22, 2015

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Fact 1: Cities are the central feature of oureconomic system

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Population is heavily concentrated

America has about 320,000,000 people

Of that, almost 260,000,000 crowd together on the 3% of thecountry that is urban

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Economic activity is also heavily concentrated

Data from Moretti (2010)

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Fact 2: Cities are expensive

(at least if they are successful)

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Housing in Manhattan...

The average Manhattan apartment, at $3,924 a month, costsalmost $3,000 more than the average rental nationwide

Zillow estimates the median price of a home in Manhattan todayas $1.28 million

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Larger cities are more costly

The Ten Most and Least Expensive Urban Areas in the Cost of 

Living Index (COLI) Annual Review 2012

National Average for 304 Urban Areas = 100

Most Expensive Least ExpensiveCOL COL

Rank Urban Areas Index Rank Urban Areas Index1 NYC (Manhattan) 225.4 1 Harlingen TX 81.82 NYC (Brooklyn) 178.6 2 McAllen TX 85.43 Honolulu HI 167.0 3 Norman OK 85.64 San Francisco CA 163.4 4 Ardmore OK 85.95 San Jose CA 153.4 5 Memphis TN 86.06 New York (Queens) NY 148.3 6 Fayetteville AR 86.0

7 Stamford CT 146.1 7 Wichita Falls TX 86.48 Washington DC 144.7 8 Muskogee OK 86.99 Orange County CA 140.6 9 Pueblo CO 87.110 Boston MA 139.9 10 Ashland OH 87.6

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Fact 3: Cities vary widely in their structure and policies

Some examples include:

  Transportation infrastructure choices

 Density of development

  Governmental structure - unified vs. fractured

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Variation in transportation infrastructure - London

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Variation in transportation infrastructure - LA

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Variation in governmental structure - LA

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Variation in governmental structure - New York

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Variation in density - Atlanta

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Variation in density - LA

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Variation in density - New York

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Fact 4: We experience cities through localendogenous amenitiesNeighborhoods like Beverly Hills, Koreatown, and Boyle Heightshave strong, persistent identities—but could be anywhere!

Many causes:

 Historical accident

 Chain migration (pre-existing networks, common language)

 Exogenous amenities (beach, views from hills)

 Racist policies (redlining, zoning, mortgage subsidies)

And yet, neighborhoods do change!

  Filtering

  Gentrification

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Fact 5: Industries are a key feature of citiesThere is systematic evidence that firms cluster geographically withother firms in the same industry, and with firms in relatedindustries

Think of:

 Financial firms clustering in Manhattan

 Tech firms in Silicon Valley

 Auto manufacturers in Detroit

 Film and television production in LA

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These facts raise many questions

Why do people (and firms) pay so much to live in cities?

Why are some cities able to sustain growth while others decline?

What are some differences across cities and what causes them?

What causes neighborhood persistence? Why do neighborhoodstransition?

How do city policies affect economic growth and resident welfareacross cities?

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Wh ill d i hi ?

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What will we do in this course?

1.   Introduce some simple models to help us think about the keyforces at work

2.  Look at recent empirical evidence to gain some answers

3.  Think about the challenges faced in producing empiricalevidence and why some studies may fail to provide reliable evidence

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Key Topics

1.  Monocentric city: a model of commuting costs

2.  Agglomeration and congestion: why cities exist and why we

don’t live in one gigantic city

3.  Endogenous (and exogenous) amenities: why do we live inneighborhoods ? Why are cities where they are?

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