Urban accounting and welfare Articles uri icon

authors

  • DESMET, KLAUS
  • ROSSI HANSBERG, ESTEBAN

publication date

  • October 2013

start page

  • 2296

end page

  • 2327

issue

  • 6

volume

  • 103

International Standard Serial Number (ISSN)

  • 0002-8282

Electronic International Standard Serial Number (EISSN)

  • 1944-7981

abstract

  • We use a simple theory of a system of cities to decompose the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities but also to greater frictions through congestion and other negative effects of agglomeration. Using data on MSAs in the United States, we estimate these city characteristics. Eliminating variation in any of them leads to large population reallocations, but modest welfare effects. We apply the same methodology to Chinese cities and find welfare effects that are many times larger than those in the US.