The billion pound drop: the blitz and agglomeration economics in London

Gerard Dericks and Hans Koster

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper exploits locally exogenous variation in the location of bombs dropped during the Blitz to quantify the effect of density restrictions on agglomeration economies in London: an elite global city. Employing microgeographic data on office rents and employment, this analysis points to effects for London several multiples larger than the existing literature which primarily derives its results from secondary cities. In particular, doubling employment density raises rents by 25%. Consequently if the Blitz had not taken place, the resulting loss in agglomeration economies to present day London would cause total annual office rent revenues to fall by $4:5 billion {equivalent to 1:2% of London's annual GDP. These results illuminate the substantial impact of land-use regulations in one of the world's largest and most productive cities.

Keywords: regulatory costs; office rents; agglomeration economies; London Blitz bombings (search for similar items in EconPapers)
JEL-codes: R14 R33 R38 (search for similar items in EconPapers)
Date: 2018-04-01
New Economics Papers: this item is included in nep-geo, nep-his and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://eprints.lse.ac.uk/88694/ Open access version. (application/pdf)

Related works:
Journal Article: The billion pound drop: the Blitz and agglomeration economies in London (2021)
Working Paper: The billion pound drop: the blitz and agglomeration economies in London (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:88694

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