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Urban Studies and Planning Commons

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Economics

Matthew Freedman

Urban Density Premium

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Full-Text Articles in Urban Studies and Planning

The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman Apr 2016

The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman

Matthew Freedman

We use longitudinal establishment data to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. Consistent with previous studies, we find an elasticity of average establishment earnings with respect to metropolitan area population of 0.03, controlling for the endogeneity of location and establishment and metropolitan area characteristics. More importantly, we find that the estimated density premium is realized almost entirely at entry and is constant over an establishment’s life. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density ...


The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman Mar 2012

The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman

Matthew Freedman

We use longitudinal micro data to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. We find that a doubling of urban density increases the average earnings of establishments by between 6 and 10 percent. The result holds after controlling for endogeneity issues and with the use of alternative measures of density. We find strong evidence against accumulated knowledge spillovers over time at the establishment level—that is, the density premium is realized at birth and is constant over the life of establishments. We find little evidence that the endogenous entry ...