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An urban overhead? Crime, agglomeration, and amenity

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  • Donovan, Stuart
  • de Graaff, Thomas
  • de Groot, Henri L.F.
  • Schiff, Aaron

Abstract

We study the effects of crime and agglomeration on the value of urban amenities using data for 134 locations in New Zealand and report three key findings. First, the negative effects of crime operate mostly via rents, with elasticities that range from −0.15 to −0.44. Accounting for endogeneity leads to larger elasticities in most specifications, possibly due to sorting effects. Second, crime has negative effects on the value of urban amenities, with elasticities that range from approximately −0.03 to −0.06 for firms and −0.02 to −0.09 for workers. Using reduced-form models, we show that these effects imply an elasticity of population with respect to crime of −0.04 to −0.10. Third, controlling for crime causes estimates of agglomeration economies to increase by approximately 0.01–0.02 points, on average. Our findings confirm that crime is an important urban congestion cost that erodes productivity and well-being.

Suggested Citation

  • Donovan, Stuart & de Graaff, Thomas & de Groot, Henri L.F. & Schiff, Aaron, 2024. "An urban overhead? Crime, agglomeration, and amenity," Journal of Housing Economics, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:jhouse:v:64:y:2024:i:c:s1051137724000135
    DOI: 10.1016/j.jhe.2024.101994
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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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