Conference explores inner-city business development
The May 1 conferences titled "The untapped urban market: attracting business to the inner city," and presented by the Buffalo Branch of the Federal Reserve Bank of New York in partnership with the University at Buffalo Department of Planning, discussed the economic challenges faced by inner-city communities and explored effective strategies for business development. We summarize the various inner-city development models presented at the conference and the discussion that arose around them.
Redefining Main Street
Subprime mortgages, foreclosures, and urban neighborhoods
This paper analyzes the impact of the subprime mortgage crisis on urban neighborhoods in Massachusetts. We explore the topic using a data set that matches race and income information from Home Mortgage Disclosure Act data with property-level, transaction data from Massachusetts Registry of Deeds offices. With these data, we show that much of the subprime lending in the state was concentrated in urban neighborhoods and that minority homeownerships created with subprime mortgages have proved exceptionally unstable in the face of rapid price declines. The evidence in Massachusetts suggests that ...
Urban sustainability and community development: Creating healthy sustainable urban communities
Increased urbanization has also led to many challenges for urban residents. In the United States, land use and zoning, transportation and infrastructure, lack of affordable housing, and disinvestment have severely affected the quality of life of poor urban populations. Despite these challenges, opportunities do exist to make economically disadvantaged urban communities more sustainable, livable, and healthy. This working paper discusses the challenges facing urban communities and then considers the opportunities that exist to develop sustainable urban communities given our current economic ...
Urban structure and growth
Most economic activity occurs in cities. This creates a tension between local increasing returns, implied by the existence of cities, and aggregate constant returns, implied by balanced growth. To address this tension, we develop a general equilibrium theory of economic growth in an urban environment. In our theory, variation in the urban structure through the growth, birth, and death of cities is the margin that eliminates local increasing returns to yield constant returns to scale in the aggregate. We show that, consistent with the data, the theory produces a city size distribution that is ...
How should suburbs help their central cities?
In this paper, we study the question whether suburbs should help finance the core public services of their central cities. We review three arguments that have been offered in favor of suburbs' fiscal assistance to their central cities. First, the central city provides public services that benefit suburban residents. Second, the central city may provide redistributive services to low-income central city residents that benefit suburbanites with redistributive preferences for such transfers. For efficiency, suburbanites should contribute toward such services in proportion to the benefits they ...
Productivity and the density of human capital
We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area's stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2 to 4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the ...
Congestion, agglomeration, and the structure of cities
Superseded by Working Paper 16-13. Congestion pricing has long been held up by economists as a panacea for the problems associated with ever increasing traffic congestion in urban areas. In addition, the concept has gained traction as a viable solution among planners, policymakers, and the general public. While congestion costs in urban areas are significant and clearly represent a negative externality, economists also recognize the advantages of density in the form of positive agglomeration externalities. The long-run equilibrium outcomes in economies with multiple correlated, but ...
Can cities control their destiny?