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Esteban Rossi-Hansberg 309 Fisher Hall, Princeton, N.J.

, 08544
Professor of Economics and International Affairs
Department of Economics and WWS
Princeton University 609-258-4024

Topics in Economics: Urban Economics

WWS 582a, Spring 2016
Wednesday, 4:15pm to 7:15pm, Robertson Hall 5
Princeton University


Overview: This is a course in urban and regional economics. We will study the main economic forces that lead to the
existence of cities and regional agglomeration. In particular we will study the theory and evidence on the emergence of
cities and their effect on worker productivity, urban amenities, and congestion. We will discuss the problems in
measuring these urban characteristics, the methodologies to do it, as well as the design of optimal urban policy. We will
also study the economic theory and evidence on the internal structure of cities together with the urban and housing
policies that can enhance urban living. Finally, the course will analyze the role cities play in aggregate economic

Grading: Your grade will be based on class participation, a class presentation, and a course project. Class participation
consists of reading the papers assigned for the class and being ready to discuss them. The class presentation will consist
of an urban policy project. A written draft of your project is due on Monday May 11. The project should consist of a
policy proposal on an urban issue. It can range from a specific policy for a specific city, to a wide ranging policy for a
system of cities in a country. The policy proposal should be clearly structured, have a policy recommendation, as well as
a clear discussion of the argument in favor and against its implementation. Your argument should be based on relevant
data and theory. Class participation will count for 30% of your grade, the class presentation for another 20% of your
grade and the final project for 50%.

Outline and Readings:

This syllabus, with the links to my notes and all papers, can be downloaded from the course website at:
Introduction and Organization

A City Model
* Notes for Lecture 1
* Harari, Cities in Bad Shape: Urban Geometry in India, working paper (2014).
* Lucas & Rossi-Hansberg, On the Internal Structure of Cities, Econometrica (2002)
* Lucas, Externalities and Cities, Review of Economic Dynamics (2001)
* Redding and Sturm, The Economics of Density: Evidence from the Berlin Wall, Econometrica (2015).
* Rossi-Hansberg, Cities under Stress, Journal of Monetary Economics (2004)
* Rossi-Hansberg, Optimal Urban Land Use and Zoning, Review of Economic Dynamics (2004)

Agglomeration Forces
* Notes for Lecture 2
* Duranton & Puga, Micro-Foundations of Urban Agglomeration Economies, Handbook of Urban and
Regional Economics (2004)
* Greenstone, Hornbeck & Moretti, Identifying Agglomeration Spillovers: Evidence from Winners and
Losers of Large Plant Openings, Journal of Political Economy (2010)
* Rosenthal & Strange, Evidence on the Nature and Sources of Agglomeration Economies Handbook of
Urban and Regional Economics, (2004)

* Notes for Lecture 3
* Carlino, Chatterjee, & Hunt, Urban Density and the Rate of Invention, Journal of Urban Economics
* Ciccone & Peri, Identifying Human Capital Externalities: Theory with Applications, Review of Economic
Studies (2006)
* Ciccone and Hall, Productivity and the Density of Economic Activity, American Economic Review (1996)
* Henderson & Arzaghi, Networking Off Madison Avenue, Review of Economic Studies (2008)
* Moretti, Workers Education, Spillovers and Productivity, American Economic Review (2004)
* Rossi-Hansberg, Sarte, & Owens, Housing Externalities, Journal of Political Economy (2010)
* Saxenian, Inside-Out: Regional Networks and Industrial Adaptation in Silicon Valley and Route 128,
Cityscape: A Journal of Policy Development and Research (1996)

* Notes for Lecture 4
* Glaeser, Kolko & Saiz, Consumer City, Journal of Economic Geography (2000)

* Rappaport, Consumption Amenities and City Population Density, Regional Science and Urban Economics
* Rappaport, Moving to Nice Weather, Regional Science and Urban Economics (2007)

Labor Markets and Sorting

* Notes for Lecture 5
* Baum-Snow & Pavan Understanding the City Size Wage Gap, Review of Economic Studies (2011)
* De la Roca & Puga, Learning by Working in Big Cities, working paper (2012)
* Glaeser & Mare, Cities and Skills, Journal of Labor Economics (2001)
* Teulings & Gautier, Search and the City, Regional Science and Urban Economics (2009)

Transport Costs and Congestion Forces

* Notes for Lecture 6
* Baum-Snow & Kahn. The Effects of Urban Rail Transit Expansions: Evidence from Sixteen Cities,
Brookings-Wharton Papers on Urban Affairs (2005)
* Baum-Snow, Did Highways Cause Suburbanization, Quarterly Journal of Economics (2007)
* Duranton & Turner The Fundamental Law of Road Congestion, American Economic Review (2011)
* Duranton & Turner, Urban Growth and Transportation, Review of Economic Studies, forthcoming (2011)
* Monte, Redding and Rossi-Hansberg. Commuting, Migration, and Local Employment Elasticities
working paper (2015)
* Saiz, The Geographic Determinants of Housing Supply, Quarterly Journal of Economics (2010)

Measuring Agglomeration
* Notes for Lecture 7
* Combes, Duranton, Gobillon, & Roux, The Productivity Advantages of Large Cities: Distinguishing
Agglomeration from Firm Selection, Econometrica (2012)
* Duranton & Overman, Testing for Localisation Using Micro-Geographic Data, Review of Economic
Studies (2005)
* Ellison & Glaeser, Geographic Concentration of Industry, American Economic Review (1999)
* Ellison, Glaeser & Kerr, What Causes Industry Agglomeration? Evidence from Coagglomeration
Patterns, American Economic Review (2010)

Decomposing Agglomeration Through Theory

* Notes for Lecture 7
* Albouy, Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas,
working paper (2012)
* Albouy, What are Cities Worth? Land Rents, Local Productivity and the Capitalization of Amenity
Values, Review of Economics and Statistics (2015)

* Behrens, Mion, Murata, & Sdekum, Spatial Frictions, working paper (2013)
* Desmet & Rossi-Hansberg, Urban Accounting and Welfare, American Economic Review (2011)
* Desmet & Rossi-Hansberg, Analyzing Urban Systems: Have Mega-Cities Become Too Large?, The
Urban Imperative: Towards Competitive Cities, Oxford UP (2015)

Systems of Cities
Notes for Lecture 8
* Au & Henderson, Are Chinese Cities Too Small?, Review of Economic Studies (2006)
* Baum-Snow & Pavan, Inequality and City Size, Review of Economics and Statistics (2013)
* Davis & Weinstein, Bones, Bombs, and Break Points: The Geography of Economic Activity, American
Economic Review (2002)
* Dobkins & Ioannides, Spatial Interactions Among U.S. Cities: 1900-1990, Regional Science and Urban
Economics, (2000)
* Ioannides & Overman Zipf's Law for Cities: An Empirical Examination, Regional Science and Urban
Economics (2001)
* Ioannides, Overman, Rossi-Hansberg & Kurt Schmidheiny, The Effect of Information and
Communication Technologies on Urban Structure, Economic Policy (2008)
* Soo, Zipf's Law for Cities: A Cross-Country Investigation, Regional Science and Urban Economics (2005)
* Behrens, Duranton, & Robert-Nicoud, Productive cities: Sorting, Selection, and Agglomeration,
Journal of Political Economy (2014)
* Black & Henderson, A Theory of Urban Growth, Journal of Political Economy (1999)
* Duranton & Puga, Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of
Products, American Economic Review (2001)
* Duranton, Urban Evolutions: The Fast, the Slow, and the Still, American Economic Review (2007)
* Eeckhout, Gibrat's Law for (All) Cities, American Economic Review (2004)
* Eeckhout, Pinheiro, Schmidheiny, Spatial Sorting, Journal of Political Economy (2014)
* Gabaix, Zipf's Law and the Growth of Cities, American Economic Review P&P (1999)
* Gabaix, Zipf's Law for Cities: An Explanation, Quarterly Journal of Economics (2004)
* Henderson, The Sizes and Types of Cities, American Economic Review (1974)
* Krugman, Increasing Returns and Economic Geography, Journal of Political Economy (1991)
* Rossi-Hansberg & Wright, Urban Structure and Growth, Review of Economic Studies (2007)

Housing and Real Estate

Notes for Lecture 9
* Campbell, Giglio, & Pathak, Forced Sales and House Prices, American Economic Review (2011)

* Davis & Heathcote, The Price and Quantity of Residential Land in the US, Journal of Monetary Economics
* Glaeser & Gyourko, The Impact of Zoning on Housing Affordability, Economics Policy Review (2003)
* Glaeser & Gyourko, Urban Decline & Durable Housing, Journal of Political Economy (2006)
* Landvoigt, Piazzesi, and Schneider, The Housing Market(s) of San Diego, American Economic Review
* Mian & Sufi, The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage
Default Crisis, Quarterly Journal of Economics (2009)
* Quigley & Raphael, Regulation and the High Costs of Housing American Economic Review (2005)
* Stroebel, Asymmetric Information about Collateral Values, Journal of Finance (2015)