THE URBAN DENSITY PREMIUM ACROSS ESTABLISHMENTS

Jason Faberman () and Matthew Freedman

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We use longitudinal microdata to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. Consistent with previous studies, we estimate a density premium between 6 and 10 percent, even after controlling for establishment composition, local skill mix, and the endogeneity of location choice. More importantly, we find that the estimated density premium is realized almost entirely at birth and is constant over the life of establishments. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density premium. We interpret our results as implying that the returns to agglomeration diffuse within a city through a reallocation channel rather than through an increase in the productivity of existing firms.

Keywords: urban density premium; dynamic agglomeration economies; establishment entry and exit (search for similar items in EconPapers)
JEL-codes: D22 R12 R30 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2014-10
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www2.census.gov/ces/wp/2014/CES-WP-14-43.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: The urban density premium across establishments (2016)
Working Paper: The urban density premium across establishments (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:14-43

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