 Who gets the urban surplus?Paul Collier and Anthony Venables Journal of Economic Geography, 2018, vol. 18, issue 3, 523-538 Abstract: High productivity in cities creates an economic surplus relative to other areas. How is this divided between workers and landowners? Simple models with homogenous labour suggest that it accrues largely—or entirely—in the form of land rents. This article shows that heterogeneity of labour in two main dimensions (productivity differentials and housing demands) radically changes this result. Even a modest amount of heterogeneity can drive the land share of surplus down to two-thirds or lower, as high productivity and/or low housing demand individuals receive large utility gains. It follows that land value appreciation understates the value of urban amenities and infrastructure. In a system of cities the sorting of workers across cities means that, while total rent is highest, the rent share of surplus is lowest in the largest and most productive cities. Keywords: Land rent; cities; productivity; wages; sorting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:jecgeo:v:18:y:2018:i:3:p:523-538. Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Economic Geography is currently edited by Jorge De la Roca, Stephen Gibbons, Simona Iammarino, Amanda Ross and James Faulconbridge More articles in Journal of Economic Geography from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.