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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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    References listed on IDEAS

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    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. 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.
    3. 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.
    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.
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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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