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Home production, expenditure, and economic geography

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  • Murphy, Daniel

Abstract

This paper proposes a new microfoundation for the benefits of urban density. Market production of services is efficient because customers effectively share land and other factors of production, leaving them idle for less time. The paper develops a theory in which market-based sharing causes residents of dense areas to purchase services on the market that their suburban counterparts produce at home. The model predicts that residents of dense areas spend more on local services, home produce less, work more, and pay higher land prices - conditional on residents' productivity and proximity to work. The paper presents evidence that these predictions are consistent with the data.

Suggested Citation

  • Murphy, Daniel, 2018. "Home production, expenditure, and economic geography," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 112-126.
  • Handle: RePEc:eee:regeco:v:70:y:2018:i:c:p:112-126
    DOI: 10.1016/j.regsciurbeco.2018.03.003
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    References listed on IDEAS

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    Cited by:

    1. Couture, Victor & Handbury, Jessie, 2020. "Urban revival in America," Journal of Urban Economics, Elsevier, vol. 119(C).
    2. Huang, Lulu & Zhang, Yuan & Zuo, Congmin, 2023. "City size and the employment of female migrant workers in the service sector: Evidence from urban China," China Economic Review, Elsevier, vol. 82(C).
    3. Su, Yichen, 2022. "Measuring the Value of Urban Consumption Amenities: A Time-Use Approach," Journal of Urban Economics, Elsevier, vol. 132(C).
    4. Alan J. Auerbach & Yuriy Gorodnichenko & Daniel Murphy, 2019. "Macroeconomic Frameworks," NBER Working Papers 26365, National Bureau of Economic Research, Inc.
    5. Murphy, Daniel, 2024. "Housing cycles and gentrification," Journal of Monetary Economics, Elsevier, vol. 144(C).
    6. Su, Yichen, 2022. "Measuring the Value of Urban Consumption Amenities: A Time-Use Approach," MPRA Paper 113158, University Library of Munich, Germany.

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