Urban Accounting and Welfare

Klaus Desmet and Esteban Rossi-Hansberg

American Economic Review, 2013, vol. 103, issue 6, 2296-2327

Abstract: We use a simple theory of a system of cities to decompose the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities but also to greater frictions through congestion and other negative effects of agglomeration. Using data on MSAs in the United States, we estimate these city characteristics. Eliminating variation in any of them leads to large population reallocations, but modest welfare effects. We apply the same methodology to Chinese cities and find welfare effects that are many times larger than those in the US.

JEL-codes: H71 O18 P25 R11 R23 R41 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.6.2296
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Citations: View citations in EconPapers (122)

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Related works:
Working Paper: Urban Accounting and Welfare (2011)
Working Paper: Urban Accounting and Welfare (2010)
Working Paper: Urban accounting and welfare (2010)
Working Paper: Urban Accounting and Welfare (2010)
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