COVID and Cities, Thus Far

Duranton, Gilles; Handbury, Jessie

doi:10.59576/epr.29.2.6-52

Journal Article

COVID and Cities, Thus Far

Abstract: Key reasons for the existence of cities are the externalities created when people cluster together in close proximity. During the COVID-19 pandemic, such interactions came with health risks and people found other ways to interact. This article documents how cities changed during COVID-19 and considers how the persistence of new ways of interacting, particularly remote work, will shape the development of cities in the future. It first summarizes evidence showing how residential and commercial prices and activity adjusted at different distances from dense city centers during and since the pandemic. The analysis employs a textbook monocentric city model to demonstrate that two adjustments associated with remote work—reduced commuting times and increased housing demand—generate the patterns observed in the data. The authors then consider how these effects might be magnified by changes in urban amenities and agglomeration forces, and what such forces might mean for the future of cities.

Keywords: cities; COVID; monocentric model; agglomeration effects;

JEL Classification: R12; R21; R31;

https://doi.org/10.59576/epr.29.2.6-52