Discussion Paper Details
Please find the details for DP12001 in an easy to copy and paste format below:
Title: Who gets the urban surplus?
Author(s): Paul Collier and Anthony J Venables
Publication Date: April 2017
Keyword(s): cities, Land rent, productivity, sorting and wages
Programme Area(s): International Trade and Regional Economics
Abstract: High productivity in cities creates an economic surplus relative to other areas. How is this divided between workers and land-owners? Simple models with homogenous labour suggest that it accrues largely - or entirely - in the form of land-rents. This paper shows that heterogeneity of labour in two main dimensions (productivity differentials and housing demands) radically changes this result. Even a modest amount of heterogeneity can drive the land share of surplus down to 2/3rds or lower, as high productivity and/or low housing demand individuals receive large utility gains. In a system of cities the sorting of workers across cities mean that the land-rent share of surplus is lowest in the largest and most productive cities.
For full details and related downloads, please visit: https://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12001
Collier, P and Venables, A. 2017. 'Who gets the urban surplus? '. London, Centre for Economic Policy Research. https://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12001