Discussion paper

DP14717 Automobiles and urban density

How has the rise of the automobile influenced urban areas over the past century? In this paper we investigate the long-run impact of car ownership on urban population density, based on a sample of 232 city observations in 57 countries. Using the presence of a car manufacturer in 1920 as a source of exogenous variation, our IV estimates indicate that car ownership substantially reduces density. A one standard deviation increase in car ownership rates causes a reduction in population density of around 40%. For employment density we find almost identical results. This result has important implications for vehicle taxation, car ownership growth in developing countries, and new transport technologies such as automated vehicles.


Ostermeijer, F, H Koster, J van Ommeren and V Mayland Nielsen (2020), ‘DP14717 Automobiles and urban density‘, CEPR Discussion Paper No. 14717. CEPR Press, Paris & London. https://cepr.org/publications/dp14717