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What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities

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  • David Albouy

    (University of Illinois and NBER)

Abstract

This paper models how to use widely available data on wages and housing costs to infer land rents, local productivity, and the total value of local amenities in the presence of federal taxes and locally produced nontraded goods. I apply the model to U.S. metropolitan areas with the aid of visually intuitive graphs. The results improve measures of productivity and feature large differences in land rents. Wage and housing cost differences across metropolitan areas are accounted for more by productivity than quality-of-life differences. Regressions using individual amenities reveal that the most productive and valuable cities are typically coastal, sunny, mild, educated, and large.

Suggested Citation

  • David Albouy, 2016. "What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 477-487, July.
    • Handle: RePEc:tpr:restat:v:98:y:2016:i:3:p:477-487
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00550
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    More about this item

    Keywords

    Land rents; productivity; amenities; hedonic valuation; non-traded goods; federal taxation;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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