Urban Economics Syllabus, 2013

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1 Urban Economics Syllabus, 2013 Lecturer: FU Shihe Classroom: Nanqiang-2 R103 Meet twice a week 10:10AM-11:50 AM, Monday and Wednesday Office: Economics Building E-202 Office phone number: fushihe@xmu.edu.cn Office hours: Tuesday 2:30PM-4:30PM or by appointment Prerequisites: Advanced Microeconomics; Dynamic optimization; Applied econometrics Grading: Your final grade consists of five parts: problem sets, presentation, a referee report, a term paper, and a final take-home exam. Each accounts for 20%. There is no unified, standard graduate textbook for this course. Therefore, we will draw materials from chapters of different books and papers from many journals. I have provided a tentative reading list below. The list will be updated from time to time. You must read at least one required reading material (marked with a * in the beginning of each item) for each topic. IMPORTANT!!! All the students should go to and subscribe the Urban and Real Estate working paper series. You will receive new working papers worldwide regularly via s. This service is free of charge. Each student is required to pick one working paper and write a referee report. IMPORTANT!! For those who will choose urban economics as your primary research field, you should visit or and get to know the Lincoln Institute s China Program. You are strongly encouraged to apply for the Lincoln graduate research fellowship. IMPORTANT! You are required to attend the Thursday-afternoon seminars organized by WISE if the topics are related to applied microeconomics. You should also attend seminars on micro and urban economics organized by School of Economics. Due to copyright issues, I will not post course materials online, but I will make most of the course materials accessible to the class. Tentative Topics 1: Introduction: space (location) in economics *Mills, E., 2000, A thematic history of urban economic analysis, Brookings-Wharton Papers on Urban Affairs,

2 *Fujita, M., Thisse, J., 2002, Economics of Agglomeration, Chapter 2: The breakdown of the price mechanism in a spatial economy. Arnott, R., Riley, J., 1977, Asymmetrical production possibilities, the social gains from inequality and the optimum town, Scandinavian Journal of Economics *Mills, E., MacKinnon, J., 1973, Notes on the new urban economics, The Bell Journal of Economics and Management Science 4, Evans, A., 2003, The development of urban economics in the twentieth century, Regional Studies 37, Fujita, M., Mori, T., 2005, Frontiers of the new economic geography, Institute of Economic Research, Kyoto University, Working Paper. Krugman, P., 1998, Space: the final frontier, Journal of Economic Perspective 12, *Glaeser, E., 1999, The future of urban research: Non-market interactions, Brookings-Wharton Papers on Urban Affairs: 2000, First cities and urban history * O Sullivan, A., 2006, The first cities, in Arnott, R., McMillen, D. (eds), A Companion to Urban Economics, * O Sullivan, A., 2007, Why do cities exist? In his textbook Urban Economics (6 th edition), chapter 2. Jacobs, J., 1969, The Economy of Cities, Chapter 1: Cities first rural development later. Kotkin, J., 2005, The City: A Global History, Modern Library. Mumford, L., 1961, The City in History. Bairoch, P., 1988, Cities and Economic Development, The University of Chicago Press. Hohenberg, P., Lees, L., 1996, The Making of Urban Europe , Harvard University Press. 3. The internal structure of cities: Monocentric city model *Kraus, M., 2006, Monocentric cities, in Arnott, R., McMillen, D. (eds), A Companion to Urban Economics, *Bruckner, J., 1987, The structure of urban equilibria: A unified treatment of the Muth-Mills model, in Mills, E. (Ed): Handbook of Regional Science and Urban Economics 2, Arnott, R., 1981, Aggregate land rents and aggregate transport costs, The Economic Journal 91, * McMillen, D., 2006, Testing for monocentricity, in Arnott, R., McMillen, D. (eds), A Companion to Urban Economics, Arnott, R., Stiglitz, J., 1979, Aggregate land rents, expenditure on public goods, and optimal city size, Quarterly Journal of Economics 93, Mirrlees, J., 1972, The optimum town, Swedish Journal of Economics, * Fujita, M., 1989, Urban Economic Theory: Land Use and City Size, Cambridge University Press. * Solow, R., 1973, On equilibrium models of urban location, in Parkin, J. (ed), Essays in Modern Economics, Longman. * Capozza, D., 1990, The stochastic city, Journal of Urban Economics 28, Comparative static analysis of monocentric city model * Wheaton, W., 1974, A comparative static analysis of urban spatial structure, Journal of Economic 2

3 Theory 9, Hartwick, J., Schweizer, U., Varaiya, P., 1976, Comparative statics of a residential economy with several classes, Journal of Economic Theory 13, Pines, D., Sadka, E., 1986, Comparative statics analysis of a fully closed city, Journal of Urban Economics 20, The internal structure of cities: Non-monocentric city model *Fujita, M., Ogawa, H., 1982, Multiple equilibria and structural transition of non-monocentric urban configurations, Regional Science and Urban Economics 12, *Anas, A., Arnott, R., Small, K., 1998, Urban spatial structure, Journal of Economic Literature 36, *McMillen, D., 2001, Nonparametric Employment Subcenter Identification, Journal of Urban Economics 50, McMillen, D., Smith, S., 2003, The number of subcenters in large urban areas, Journal of Urban Economics 53, Lucas, R., 2001, Externalities and cities, Review of Economic Dynamics 4, Issue 2, *Lucas, R., Rossi-Hansberg, E., 2002, On the internal structure of cities, Econometrica 70, , 6. Optimal city size and city size distribution *Arnott, R., 1979, Optimal city size in a spatial economy, Journal of Urban Economics 6, *Arnott, R., 2004, Does the Henry George theorem provides a practical guide to optimal city size? American Journal of Economics and Sociology 63, *Kanemoto, Y., Ohkawara, T., Suzuki, T., 1996, Agglomeration economies and a test for optimal city sizes in Japan, Journal of the Japanese and International Economies 10, *Gabaix, X., 1999, Zipf s law for cities: An explanation, Quarterly Journal of Economics 114, Gabaix, X., Ioannides, Y., 2004, The evolution of city size distribution, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, Soo, K., 2005, Zipf s law for cities: A cross-country investigation, Regional Science and Urban Economics 35, Why do cities exist? Increasing returns to scale and agglomeration economies *Vickrey, W., 1977, The city as a firm, in Feldstein, M., Inman, R. (Eds), The Economics of Public Services, *Henderson, J., 2003, Marshall's scale economies, Journal of Urban Economics 53, *Duranton, G., Puga, D., 2004, Microfoundations of urban agglomeration economies, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, *Rosenthal, S., Strange, W.,., 2004, Evidence on the nature and sources of agglomeration economies, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, Eberts, R., McMillen, D., 1999, Agglomeration economies and urban public infrastructure, in Cheshire, P., Mills, E. (Ed): Handbook of Regional Science and Urban Economics 3,

4 *Puga, D., 2010, The magnitude and causes of agglomeration economies, Journal of Regional Science 50, Urbanization, suburbanization, gentrification, and urban renewal *Arnott, R., Lewis, F., 1979, The transition of land to urban use, Journal of Political Economy 87, *Henderson, V., 2005, Urbanization and growth, in Handbook of Economic Growth. Henderson, V., Wang, H., 2007, Urbanization and city growth: The role of institutions, Regional Science and Urban Economics. Lucas, R., 2004, Life earnings and rural-urban migration, Journal of Political Economy 112, S29-S59. *Mieszkowski, P., Mills, E., 1993, The causes of metropolitan suburbanization, Journal of Economic Perspective 7, Glaeser, E., Kahn, M., 2001, Decentralized employment and the transformation of the American city, Brookings-Wharton Papers on Urban Affairs, Mills, E., 1992, The measurement and determinants of suburbanization, Journal of Urban Economics 32, Glaeser, E., Kahn, M., 2004, Sprawl and urban growth, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, * Kolko, J., 2007, The determinants of gentrification, SSRN Working Paper. Brueckner, J., Rosenthal, S., 2009, Gentrification and neighborhood housing cycles: Will America s future downtowns be rich? Review of Economics and Statistics 91, Urban growth and urban dynamics *Black, D., Henderson, V., 1999, A theory of urban growth, Journal of Political Economy 107, Rossi-Hansberg, E., Wright, M., 2007, Urban structure and growth, Review of Economic Studies 74, * Palivos, T., Wang, P., 1996, Spatial agglomeration and endogenous growth, Regional Science and Urban Economics 26, Camacho, C., Zou, B., 2004, The spatial Solow model, Economics Bulletin 18, Boucekkine, R., Camacho, C., Zou, B., 2006, Bridging the gap between growth theory and the new economics geography: The spatial Ramsey model, Working Paper. Duranton, G., 2007, Urban evolutions: the fast, the slow, and the still, American Economic Review 97, : Urban labor markets Fu, S., Ross, S., 2013, Wage premia in employment clusters: How important is worker heterogeneity? Journal of Labor Economics 31, no.2, forthcoming. Glaeser, E., D. Mare, 2001, Cities and skills, Journal of Labor Economics 19, *Yanknow, J., 2006, Why do cities pay more? An empirical examination of some competing theories f the urban wage premium, Journal of Urban Economics 60, Moretti, E., 2004, Human capital externalities in cities, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4,

5 Kain, J., 2004, A pioneer s perspective on the spatial mismatch literature, Urban Studies 41, Gabriel, S., Rosenthal, S., 1996, Commutes, neighborhood effects, and earnings: An analysis of racial discrimination and compensating differentials, Journal of Urban Economics 40, Crampton, G., 1999, Urban labor markets, in Cheshire, P., Mills, E. (Ed): Handbook of Regional Science and Urban Economics 3, Glaeser, E., Kahn, M., Rappaport, J., 2007, Why do the poor live in cities? The role of public transportation, Journal of Urban Economics. *Zenou, Yves, 2009, Urban labor economics, Cambridge University Press. *Glaeser, E., Rosenthal, S., and Strange, W., 2010, Urban economics and entrepreneurship, Journal of Urban Economics 67, Urban housing / real estate markets *Arnott, R., 1987, Economic theory and housing, in Mills, E. (Ed): Handbook of Regional Science and Urban Economics 2, * DiPasquale, D., Wheaton, W., 1996, Urban Economics and Real Estate Markets, Prentice Hall. Sheppard, S., 1999, Hedonic analysis of housing markets, in Cheshire, P., Mills, E. (Ed): Handbook of Regional Science and Urban Economics 3, * Posdena, R., 1988, The Modern Economics of Housing, Quorum Books. * Green, R., Malpezzi, S., 2003, A Primer on U.S. Housing Markets and Housing policy, The Urban Institute Press. Arnott, R., Braid, R., 1997, A filtering model with steady-state housing, Regional Science and Urban Economics 27, Mankiw, G., Weil, D., 1989, The baby boom, the baby bust, and the housing market, Regional Science and Urban Economics 19, Rothenberg, J., 1991, The Maze of Urban Housing Markets, The University of Chicago Press. 施瓦茨, 美国住房政策, 中译本, 中信出版社,2008. *Case, K. and Shiller, R., 2003, Is there a bubble in the housing market? Brookings-Wharton Papers on Urban Affairs, Bajari, P., Chu, C., and Park, M, 2008, An empirical model of subprime mortgage default from , NBER Working Paper Mayer, C. and Pence, K., 2008, Subprime mortgage: What, where, and to whom? NBER Working Paper Sowell, T., 2009, The Housing Boom and Bust, Basic Books. Leasing Public Land: Policy Debates and International Experiences, edited by S. Bourassa and Y. Hong, 2003, Lincoln Institute of Land Policy. 12 Urban transportation economics *Arnott, R., Kraus, M., 2003, Transport economics, in Hall, R. (Ed.), Handbook of Transportation Science, Springer. *Arnott, R., Unpriced transport congestion, Journal of Economic Theory 21, *Arnott, R., de Palma, A., Lindsey, R., 1993, A structural model of peak-period congestion: A traffic bottleneck with elastic demand, American Economic Review 83, Morrison, S., Winston C., 2007, Another Look at Airport Congestion Pricing, American Economic Review 97,

6 Pels, E., Verhoef, E., 2004, The economics of airport congestion pricing, Journal of Urban Economics 55, *Small, K. and Verhoef, E., 2007, The economics of urban transportation, Routledge. Durenton, G., Turner, M., 2011, The fundamental law of road congestion: evidence from US cities, American Economic Review 101, Shoup, D., 2011, The High Cost of Free Parking, Planners Press. 13 Local public finance *Tiebout, C., 1956, A pure theory of local expenditure, Journal of Political Economy 64, Yinger, J., 1982, Capitalization and the theory of local public finance, Journal of Political Economy 90, *Brueckner, J., 1997, Infrastructure financing and urban development: The economics of impact fees, Journal of Public Economics 66, Wildasin, D., 1987, Theoretical analysis of local public economics, in Mills, E. (Ed): Handbook of Regional Science and Urban Economics 2, Prud Homme, R., 1987, Financing urban public services, in Mills, E. (Ed): Handbook of Regional Science and Urban Economics 2, Ross, S., Yinger, J., 1999, Sorting and voting: A review of the literature on urban public finance, in Cheshire, P., Mills, E. (Ed): Handbook of Regional Science and Urban Economics 3, Epple, D., Nechyba, T., 2004, Fiscal decentralization, in Henderson, V., Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, Note: If you are interested in local public economics, the syllabus designed by Jeffrey Zax provides you an excellent reading list. (downloadable at ). 14 New economic geography Fujita, M., Krugman, P., Venables, A., 1999, The Spatial Economy, The MIT Press. Krugman, P., 1991, Geography and trade, Leuven University Press. Krugman, P., 1996, The self-organizing economy, Blackwell Publishers. Clark, G., Feldman, M., Gertler, M.(eds), The Oxford handbook of economic geography, Oxford University Press. Henderson, V. (ed), 2005, New Economic Geography, Edward Elgar Publishing, Inc. 15 Neighborhood effects and social interactions Becker, G., 1998, Accounting for tastes, Harvard University Press. Becker, G., Murphy, K., 2000, Social Economics: Market Behavior in a Social Environment, The Belknap Press of Harvard University Press. *Bayer, P, S. Ross, 2006, Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application, NBER Working Paper *Ross, S., 2010, Social interactions within cities: Neighborhood environments and peer relationships, Working Paper, Department of Economics, University of Connecticut. Ioannides, Y., 2012, From Neighborhoods to Nations: The Economics of Social Interactions, Princeton University Press. 6

7 Brueckner, J., Largey, A., 2008, Social interaction and urban sprawl. Journal of Urban Economics 64, Regulating cities *Mills, E., 2005, Why do we have urban density controls? Real Estate Economics 33, Fu, Y., Somerville, T , Site density restrictions: Measurement and empirical analysis. Journal of Urban Economics 49: Glaeser, E., Gyourko, J., 2002, The impact of zoning on housing affordability, NBERWorking Paper Glaeser, E., Gyourko, J., Saks, R., Why is Manhattan so expensive? Regulation and the rise in housing prices. Journal of Law and Economics 48, Glaeser, E., Ward, B., 2009, The causes and consequences of land use regulation: Evidence from Greater Boston, Journal of Urban Economics 65, Viard, B., Fu, S., 2011, The Effect of Beijing s Driving Restrictions on Pollution and Economic Activity, Working Paper. 17 Sociology of cities Cullen, J. and Levitt, S., 1999, Crime, urban flight, and the consequences for cities, Review of Economics and Statistics 81, Cutler, D., Glaeser, E., Vigdor, J., 2008, When are ghettos bad? Journal of Urban Economics 63, DiPasquale, D. and Glaeser, E., 1999, Incentive and social capital: Are homeowners better citizens? Journal of Urban Economics 45, Eid, J., Overman, H., Puga, D., Turner, M., 2006, Fat cities, questioning the relationship between urban sprawl and obesity, Journal of Urban Economics 63, *Florida, Richard, 2002, Bohemia and Economic Geography, Journal of Economic Geography 2, *Glaeser, E., J., Kolko, A. Saiz, 2001, Consumer City, Journal of Economic Geography 1, Glaeser, E. and Sacerdote, B., 1999, The Social Consequences of Housing, Harvard Institute of Economic Research, Discussion Paper. Jacobs, J., 1961, The Death and Life of Great American Cities, Vintage Books. Kain, J., 1992, The spatial mismatch hypothesis: Three decades later, Housing Policy Debate 3, Studies on Chinese cities *Au, C. and Henderson, V., 2006, Are Chinese cities too small? Review of Economic Studies 73, Anderson, G., Ge, Y., 2005, The size distribution of Chinese cities, Regional Science and Urban Economics 35, Fu, S. and Hong, J., 2011, Testing Urbanization Economies in Manufacturing Industries: Urban Diversity or Urban Size? Journal of Regional Science 51, Zheng, S., Fu, Y., Liu, H., 2006, Housing-choice hindrances and urban spatial structure, Journal of Urban Economics 60, Fujita, et al, 2004, Spatial distribution of economic activities in Japan and China, in Henderson, V., 7

8 Thisse, J.(Eds), Handbook of Regional Science and Urban Economics 4, Fu, Y., Gabriel, S., 2011, Labor migration, human capital agglomeration and regional development in China, Regional Science & Urban Economics 42, Henderson, V., 2005, Growth of China s medium-size cities, Brookings-Wharton Papers on Urban Affairs, Other topics and final readings on spatial equilibrium Regional economics; Urban minority issues; Inequality and urban poverty; introduction to GIS, introduction to spatial econometrics, etc. *Roback, J., 1982, Wages, rents, and the quality of life, Journal of Political Economy 90, Glaeser, E., 2007, The Economics Approach to Cities, NBER Working Paper Glaeser, E., Gottlieb, J., 2009, The wealth of cities: Agglomeration economies and spatial equilibrium in the United States, Journal of Economic Literature 47, Glaeser, E., 2008, Cities, Agglomeration and Spatial Equilibrium, Oxford University Press. Appendix: Undergraduate textbooks Arnott, R., D. McMillen, eds, 2006, A Companion to Urban Economics, Blackwell Publishing. Brueckner, J., 2011, Lectures on Urban Economics, The MIT Press. DiPasquale, D., Wheaton, W., 1996, Urban Economics and Real Estate Markets, Prentice Hall. Mills, E., Hamilton, B., 1994, Urban Economics, 5 th edition, Harper Collins College Publishers. O Flaherty, B., 2005, City Economics, Harvard University Press. O Sullivan, A., 2011, Urban Economics, 8 th edition, Irwin McGraw-Hill. Graduate textbooks and references Arnott, R., ed., 1996, Regional and Urban Economics, Volume 1-2, Harwood Academic Publishers. Fujita, M., 1989, Urban Economic Theory: Land Use and City Size, Cambridge University Press. Fujita, M., Krugman,P., Venables, A., 2001, The Spatial Economy, The MIT Press. Fujita, M., Thisse, J.F., 2002, Economics of Agglomeration, Cambridge University Press. Henderson, J.V., 1985, Economic Theory and The Cities, Academic Press. Kanemoto, Y., 1980, Theories of Urban Externalities, North-Holland Publishing Company. Papageorgiou, Y., Pines, D., 1999, An Essay on Urban Economic Theory, Springer. Tolley, G., Diamond, D. (eds.), 1982, The Economics of Urban Amenities, Academic Press. Handbook of Regional and Urban Economics, Volume 1-4. Online resources (publications and working papers) on regional and urban economics: Urban Economics Association: American Real Estate and Urban Economics Association (AREUEA), A not-for-profit, knowledge-oriented network. Disseminates organizational and conference 8

9 information; material about its publication, Real Estate Economics; and wider news. The web books of regional science at : Urban Institute: repec.org XMU library: Econlit; ScienceDirect. Economics Departments, Institutes and Research Centers in the World (EDIRC): Regional and Urban Economics, Real Estate - Global institutional index segment for urban and regional economics areas of work, from the University of Connecticut's Department of Economics. Fisher Center for Real Estate and Urban Economics (FCREUE) - Program information from a leading center for research and continuing professional education in this field. The Center operates from the Haas School of Business, at the University of California, Berkeley. books on regional and urban economics. University of Glasgow: Department of Urban Studies - This site includes information on program, research and events from a leading British research center, as well as material accessible only to the Department's staff. University of Wisconsin-Madison Center for Real Estate - Faculty and program information from this research institute, whose work is grounded in urban land economics. This site provides a simulation study program for a monocentric city where students can alter parameter values and observe how characteristics of cities change in response. For example, students can see how rental rates for land change by altering commuting cost, income, and so on. Online public data sources: U.S. and international census data: China 1982, 1990 census: China Household Finance Survey: American Housing Survey: National Longitudinal Surveys: Panel Study of Income Dynamics: China Health and Nutrition Survey: China General Social Survey Data: or Confidential microdata: Restricted China Manufacturing firm panel data, 2004 China manufacturing census data, custom 9

10 product level data are available at and at WISE. These data are also accessible at WISE: land parcel transaction data since 2000 and patent data since the 1980s. Major field journals Journal of Urban Economics Regional Science and Urban Economics Journal of Economic Geography Journal of Labor Economics Urban Studies Journal of Regional Science Real Estate Economics Journal of Public Economics Brookings-Wharton Papers on Urban Affairs Journal of Housing Economics Software There is a growing tendency to incorporate GIS into urban empirical studies. Some urban models require simulations. The following software should be added to your tool box: GIS, STATA, SAS, MATLAB(or Maple, Mathematica). Fun stuff to read: Cochrane, J., 2005, Writing tips for Ph. D. students, available at Davis, D., 2001, Ph.D. thesis research: Where do I start? Available at Research.pdf Mankiw, G., 1996, My rules of thumb, American Economist 40, no.1, Might, M, 2010, 10 easy ways to fail a Ph.D., Varian, H., 1997, How to build an economic model in your spare time? American Economist 41, no.2, Thompson, W., 2012, A guide for the young economist, 2 nd edition,the MIT Press. 10

Johns Hopkins University Fall APPLIED ECONOMICS Regional Economics

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