SYRACUSE UNIVERSITY
Maxwell School of Citizenship and Public Affairs

ECN 741 - Urban Economics
Fall 2009

 

Professor Yinger
451 Eggers Hall
Phone: (315) 443-9062
Email:  jyinger@maxwell.syr.edu
http://faculty.maxwell.syr.edu/jyinger

 

Class Location: 112 Eggers
Class Time:    11:00 – 12:20  TTH
Office Hours: 1:00 – 2:00 TTH or by  appointment 

 

Please contact Mrs. Santy to make an appointment with the professor

Mary Santy 
426 Eggers Hall  
Phone: (315) 443-3115
Email: mjsanty@maxwell.syr.edu

 

 

Course Overview and Requirements

 

This course is an introduction to urban economics for Ph.D. students in economics. Models of urban residential structure form the core of the field of urban economics. A large share of the course, particularly at the beginning, is devoted to these models. The rest of the course covers conceptual and empirical literature on three other central topics in urban economics: urban housing markets, racial and ethnic discrimination in housing, and local public finance. Ph.D. level microeconomics is a prerequisite.

This course is part of a two-course sequence designed to prepare students for the comprehensive examination in urban and regional economics, although students are obviously welcome to take the course even if they do not plan to take this exam. The other half of this sequence is Economics 745, Regional Economics. Roughly speaking, this class examines economic issues within an urban area and ECN 745 examines economic issues that cut across urban areas along with selected topics in housing finance.

The required reading for this course is available on the internet either through links indicated in the syllabus or through SU Blackboard.

Every student must (1) complete a take-home mid-term on urban models, (2) submit a draft research paper on a topic of his or her choice, (3) submit a revised research paper, (4) present his or her research paper to the class, and (5) take a final exam. A student’s overall grade will be based on his or her grades for these five assignments, weighted as follows: 

 

Mid-term 20%
Draft paper 10%
Revised paper 40%
Presentation 10%
Final  20%


The research paper should include a literature review, a conceptual model, and a plan for empirical work. Students are not expected to collect data and conduct empirical work for this paper, although they may do so if they choose. The draft research paper must be submitted by October 27th.  Students will then receive comments from the professor by mid November.  The final research paper is due on December 10th.

Practice Exam

 

Reading List:

Required reading is denoted with an asterisk (*). Other readings are for reference. They consist of examples of good recent research in urban economics, classic articles and books, survey articles, and articles by people connected with Syracuse.  They also provide one good source of ideas for student research papers.

Many of the readings come from one of following five sources, each of which is listed with the abbreviation used on the reading list below:
 

  1. Handbook of Urban and Regional Economics, Vol. II, Urban Economics, edited by E.S. Mills (Amsterdam: Elsevier, 1988), abbreviated HURE-II;

  2. Handbook of Urban and Regional Economics, Vol. III, Applied Urban Economics, edited by P. Cheshire and E.S. Mills (Amsterdam: Elsevier,  1999), abbreviated HURE-III;

  3. Handbook of Regional and Urban Economics, Vol. IV, Cities and Geography, edited by J.V. Henderson and J. F. Thisse (Amsterdam: Elsevier,  2006), abbreviated HURE-IV;

  4. Journal of Urban Economics, abbreviated JUE;

  5. Regional Science and Urban Economics, abbreviated RSUE;
     

Most of the articles on the reading list are available through e-journals at the Syracuse University Library web site.  In addition, several articles are available through one of the e-books on my web site, particularly the e-book called Housing and Commuting: The Theory of Urban Residential Structure.  The main page for these e-books is G:\MAX-Filer\Webhost\faculty-sites\yinger2\ebooks\index.html  Articles that are not directly available on the internet will be posted on the SU Blackboard page for the class. 

A recent book by one of the best-know scholars in urban economics, Edward Glaeser, provides excellent supplementary readings for this course (and for the regional economics course).  The book is Cities, Agglomeration, and Spatial Equilibrium (Oxford University Press, 2008).  The relevant sections of this book (abbreviated by E.L. Glaeser, CASE) are indicated on the reading list below.

Students may also want to take a look at the computer programs developed for PPA730-11, Urban Policy. These programs solve basic urban models and provide helpful tools for working on the intuition of these models. One of these programs solves an urban model with many worksites and many types of households. Instructions for running this program, which is called Gridcity, can be found on my web site under Urban Policy. Look for a document called "Using Gridcity."  The other programs, which give extensive graphs for the simplest urban models, were written by a former student in this class. See Youngsun Kwon's urban simulation model. To access the "closed"  urban model there, you need to enter the userid "maxwell"  and the password "orange."  The "open"  model does not require a password.


Reading List

*Note:  This reading list also serves as a (rough) class schedule.
 

Topic 1.  Urban Models 1:  Basic Model of Urban Residential Spatial Structure 

Some classics: 

  • R. F. Muth, Cities and Housing (University of Chicago Press, 1969). 

  • W. Alonso, Location and Land Use (Harvard University Press, 1964).

 

Topic 2.  Urban Models 2:  Comparative Static Analysis of the Basic Urban Model 

  • *Y. Kwon, "Urban Comparative Statics When Commuting Cost Depends on Income," Journal of Housing Economics, March 2005, pp. 48-56 (based on his Ph.D. Dissertation, Syracuse University, 2000).  Available through e-journals at the SU library.

Topic 3.  Urban Models 3:  More General Treatment of the Demand for Housing 

 

 Topic 4.  Estimating the Demand for Housing 

  • *J.A. Zabel, "The Demand for Housing Services," Journal of Housing Economics, March 2004, pp. 16-35.  Available through e-journals at the SU library.

  • E.O. Olsen, "The Demand and Supply of Housing Services: A Critical Survey of the Empirical Literature," in HURE-II.

  • A. Saiz,  "Immigration and Housing Rents in American Cities," JUE, 2007, pp. 345–371.  Available through e-journals at the SU library.

  • Yannis M. Iaonnides and Jeffrey E. Zabel.  2002.  "Neighborhood Effects and Housing Demand." Journal of Applied Econometrics, 18, pp 563-584.

  • C. Rapaport, "Housing Demand and Community Choice: An Empirical Analysis,”" JUE, September 1997, pp. 243-260. 

  • J.V. Henderson and Y.M. Ioannides, "Dynamic Aspects of Consumer Decisions in Housing Markets," JUE, September 1989, pp. 212-230.

  • A.C. Goodman, "An Econometric Model of Housing Price, Permanent Income, Tenure Choice, and Housing Demand," JUE, May 1988, pp. 327‑53.

 

Topic 5.   Estimating the Supply of Housing (Not covered in class)

  • *A.C. Goodman,  "Central Cities and Housing Supply: Growth and Decline in U.S. Cities." Journal of Housing Economics, December 2005, pp. 315-333.  Available through e-journals at the SU library.

  • *J.P. Harding, S.S. Rosenthal and C.F. Sirmans, "Depreciation of Housing Capital, Maintenance, and House Price inflation: Estimates from a Repeat Sales Model," JUE, 2007, pp. 193–217. Available through e-journals at the SU library.

  • E.L. Glaeser and J. Gyourko, "Urban Decline and Durable Housing," Journal of Political Economy, April 2005, pp. 345-376.  

  • D.P. Sims, "Out of control: What Can We Learn from the End of Massachusetts Rent Control?"  JUE, 2007, pp. 129–151.

  • S.S. Rosenthal and R.W. Helsley,  "Redevelopment and the Urban Land Price Gradient," JUE, March 1994, pp. 182-200. Available through e-journals at the SU library.

  • A. C. Helms, "Understanding Gentrification: An Empirical Analysis of the Determinants of Urban Housing Renovation," JUE, November 2003, pp. 474-498.
    Available through e-journals at the SU library.

  • J. Gyourko and A. Saiz, "Reinvestment in the Housing Stock: The Role of Construction and Supply Side Costs," JUE, March 2004, pp. 238-256. 

  • Y. M. Ioannides, "Residential Neighborhood Effects," RSUE, March 2002, pp. 145-166. 

  • N. Kutty, "A Dynamic Model of Landlord Reinvestment Behavior,"  JUE, March 1995, pp.  212-238  (based on her PhD. Dissertation, Syracuse University, 1991). 

  • R. Arnott, "Economic Theory and Housing," in HURE-II.

 

Topic 6.  Urban Models 4:  More General Treatment of the Urban Transportation System 

  • *J. Yinger, "Around the Block: Urban Models with a Street Grid," JUE, May 1993, pp. 305-330.  (Available in Housing and Commuting, Chapter 2.1.) 

  • Y. Kwon, "Rent-Commuting Cost Function Versus Rent-Distance Function,"  Journal of Regional Science, November 2002, pp. 773-791 (based on his Ph.D. dissertation, Syracuse University, 2000). Available through e-journals at the SU library.

  • W.C. Wheaton, "Land Use and Density in Cities with Congestion," JUE, March 1998, pp.  258-272. 

  • A. Anas and L.M. Moses, "Mode Choice, Transport Structure and Urban Land Use," JUE, April 1979, pp. 228‑46. 

Topic 7.  Urban Models 5:  Sorting or More Than One Income-Taste Class 

  • *E.L. Glaeser, Matthew E. Kahn and Jordan Rappaport.  2008. "Why Do the Poor Live in Cities?  The Role of Public Transportation." Journal of Urban Economics 63 (1) (January): 1-24. Available through e-journals at the SU library.

  • *J. Yinger, “The Price of Access to Jobs:  Bid Function Envelopes for Commuting Costs,” Unpublished Manuscript, pages 1-13.  Posted on class Blackboard page. (Just skim the section on multiple worksites.)

  • E.L. Glaeser, CASE, Chapter 2, pp. 18-33, and Chapter 5, pp. 165-175.

  • A. Hardman and Y. M. Ioannides, "Neighbors’ Income Distribution: Economic Segregation and Mixing in US Urban Neighborhoods," Journal of Housing Economics, December 2004, pp. 368-382. 

  • A. Anas and I. Kim, "Income Distribution and the Residential Density Gradient," JUE, March 1992, pp. 164-180. 

  • J. Hartwick, U. Schweizer, and P. Varaiya, "Comparative Statics of a Residential Economy with Several Classes," Journal of Economic Theory, 1976, pp. 396-413.

Topic 8.  Urban Models 6: Urban Labor Markets and Suburban Employment 

  • *M. J. White, "Urban Areas with Decentralized Employment: Theory and Empirical Work," in HURE-III. Available through class's Blackboard page 

  • *J.J. Yankow, "Why Do Cities Pay More? An Empirical Examination of Some Competing Theories of the Urban Wage Premium," JUE, 2006, 60 (2): 139–161.  Available through e-journals at the SU library.

  • E.L. Glaeser, CASE, Chapter 2, pp. 40-46.

  • C.H. Wheeler, "Cities and the Growth of Wages Among Young Workers: Evidence from the NLSY,"  JUE, 2006, pp. 162–184.  Available through e-journals at the SU library.

  • Robert E. Lucas, Jr. and Esteban Rossi-Hansberg. 2002. "On the Internal Structure of Cities,"  Econometrica, 74 (July): 1445-1476. 

  • D. Timothy and W. C. Wheaton, "Intra-Urban Wage Variation, Employment Location, and Commuting Times," JUE,  2001, (September): 338-366. 

  • S. L. Ross, "The Long-Run Effect of Economic Development Policy on Resident Welfare in a Perfectly Competitive Urban Economy," JUE, November 1996, pp. 354-380  (based on one essay from his Ph.D. Dissertation, Syracuse University, 1994).

  • S. L. Ross and J. Yinger,  "A Comparative Static Analysis of Open Urban Models with a Full Labor Market and Suburban Employment," Regional Science and Urban Economics, 1995 (October): 575-605.  (Available in Housing and Commuting, Chapter 3.2.) 

  •  J. Yinger, "City and Suburb:  Urban Models with More than One Employment Center," JUE, March 1992, pp. 181-205.  

 

Topic 9.  Empirical Tests of Urban Models 

  • *J. Yinger, Housing and Commuting, Chapter 1.3, "The Basic Urban Model," pp. 38-43. 

  • *J. Yinger, “The Price of Access to Jobs:  Bid Function Envelopes for Commuting Costs,” Unpublished Manuscript, pages 13 to the end. Posted on class Blackboard page.

  • N.E. Coulson, "Really Useful Tests of the Monocentric Model," Land Economics, August 1991, pp. 299-307. Available through e-journals at the SU library.

  • *J. Yinger, Housing and Commuting, Chapter 1.3, "The Basic Urban Model," pp. 38-43. 
    *N.E. Coulson, "Really Useful Tests of the Monocentric Model," Land Economics, August 1991, pp. 299-307. Available through     e-journals at the SU library.

  • E. L. Glaeser and Matthew E. Kahn. 2006. "Sprawl and Urban Growth."  in HURE IV. pp 2481-2527  

  • K. A. Small and S. Song, "Population and Employment Densities: Structure and Change," JUE, November 1994, pp. 292-313. 

  • D. P. McMillen, "One Hundred Fifty Years of Land Values in Chicago:  A Nonparametric Approach," JUE, July 1996, pp. 100-124. 

 

Topic 10.  Urban Models 7: Neighborhood Amenities 

  • *A. M. Polinsky and S. Shavell, "Amenities and Property Values in a Model of an Urban Area," Journal of Public Economics,  1976 (January/February): 119‑30. Available through class's Blackboard page.

  • *J. Yinger, "Racial Prejudice and Racial Residential Segregation in an Urban Model," JUE, 1976 (October): 383‑396.  Available through class's Blackboard page.

  • E.L. Glaeser, CASE, Chapter 2, pp. 37-40, and Chapter 4, pp. 188-203.

  • K.A. Kiel and M. Williams, "The Impact of Superfund Sites on Local Property Values: Are all Sites the Same?" JUE, (2007): 170–192.  Available through e-journals at the SU library.

  • D. P. McMillen, "Airport Expansions and Property Values: The case of Chicago O'Hare Airport," JUE, May 2004, pp. 627-640. 

  • K.Y. Chay and M. Greenstone. "Does Air Quality Matter? Evidence from the housing market," Journal of Political Economy, April 2005, pp. 376-425.

Topic 11:  Race and Ethnicity 1:  Discrimination in Housing 

Topic 12:  Race and Ethnicity 2:  Residential Segregation

  • *K. R. Ihlanfeldt and B. Scafidi, "Whites’ Neighborhood Racial Preferences and Neighborhood Racial Composition in the United States:  Evidence from the Multi-City Study of Urban Inequality," Housing Studies, May 2004, pp. 325-359.  Available through class's Blackboard page.

  • E.L. Glaeser, CASE, Chapter 5, pp. 175-188.

  • J. K. Hellerstein, D. Neumark, and M. McInerney, Spatial Mismatch or Racial Mismatch?, JUE, September 2008, pp. 464-479.

  • Patrick Bayer, Robert McMillan, and Kim S. Rueben. 2004. “What Drives Racial Segregation? New Evidence Using Census Microdata.” Journal of Urban Economics 56 (2) (November): 514–535.

  • D. M. Cutler, E. L. Glaeser, and J. L. Vigdor, "The Rise and Decline of the American Ghetto" Journal of Political Economy, June 1999, pp. 455-506. 

  • D. M. Cutler and E. L. Glaeser, "Are Ghettos Good or Bad?" Quarterly Journal of Economics, August 1997, pp. 827-872. 

  • J. Yinger, Closed Doors, Opportunities Lost: The Continuing Costs of Housing Discrimination (Russell Sage, 1995), Chapter 7. 

  • P. N. Courant and J. Yinger, "On Models of Racial Prejudice and Urban Residential Structure," JUE, 1977 (July ): 272‑91.

 

Topic 13:  Race and Ethnicity 3:  The Black-White Homeownership Gap 

  • *S. A. Gabriel and S. S. Rosenthal, "Homeownership in the 1980s and 1990s:  Aggregate Trends and Racial Gaps," JUE, January 2005, 57(1): 101-127.  Available through e-journals at the SU library.

  • *Y. Deng, S. L. Ross, and S. M. Wachter, "Racial Differences in Homeownership: The Effect of Residential Location," Regional Science and Urban Economics, September 2003, 33(5): 517-556.  Available through e-journals at the SU library.

  • T. P. Boehm and A. M. Schlottman, "The Dynamics of Race, Income, and Homeownership," JUE, 2004 (January): 113-130.

  • G. Painter, S. Gabriel, and D. Myers, "Race, Immigrant Status, and Housing Tenure Choice," JUE, 2001 (January): 150-167.          

 

Topic 14:  Race and Ethnicity 4:  Discrimination in Mortgage Lending   

  • *S. Ross and J. Yinger, The Color of Credit: Mortgage Lending Discrimination, Research Methodology, and Fair-Lending Enforcement, MIT Press, 2002, Chapters 1 ("Introduction”), 2 ("The Mortgage Market and the Definition of Mortgage Lending Discrimination”), and 6 ("Accounting for Variation in Underwriting Standards Across Lenders”).  Available through class's Blackboard page.

  • *Stephen L. Ross, Margery Austin Turner, Erin Godfrey, Robin R. Smith. 2008. "Mortgage Lending in Chicago and Los Angeles: A Paired Testing Study of the Pre-application Process." Journal of Urban Economics 63 (3) (May): 902-919.       

  • A. H. Munnell, L. E. Browne, J. McEneaney, and G. M. B. Tootell, "Mortgage Lending in Boston: Interpreting HMDA Data," American Economic Review, 1996 (March): 25-53.  Available through http://www.jstor.org.

  • G. Ho and A. Pennington-Cross, "The Impact of Local Predatory Lending Laws on the Flow of Subprime Credit," JUE, (2006): 210–228. Available through e-journals at the SU library.

Topic 15:  Local Government Finance 1:  Bidding 

 

Here are some classics: 

  • C. Tiebout, "A Pure Theory of Local Expenditures," Journal of Politic al Economy, October 1956, pp. 416-424. 

  • W. E. Oates, "The Effects of Property Taxes and Local Public Spending on Property Values:  An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, November/December 1969, 957-971.  (See also the exchange between Pollakowski and Oates, JPE, July/August 1973.) 

 

Topic 16:  Local Government Finance 2:  Sorting 

  • *S. Ross and J. Yinger, "Sorting and Voting: A Review of the Literature on Urban Public Finance," in HURE-III, pp. 2006-2030 and 2042-2053.  (Available in Housing and Commuting, Chapter 5.5.)  

  • *John Yinger, “Hedonic Markets and Explicit Demands: Bid-Function Envelopes for Public Services, Neighborhood Amenities, and Commuting Costs.” Available through class's Blackboard page.

  • E.L. Glaeser, CASE, Chapter 6.

  • C. A. M. de Bartolome and S. L. Ross. 2003.  "Equilibria with Local Governments and Commuting:  Income Sorting vs Income Mixing," JUE, July: pp. 1-20. 

  • Epple, Dennis, Radu Filimon, and Thomas Romer. 1993. “Existence of Voting and Housing Equilibrium in a System of Communities with Property Taxes.”Regional Science and Urban Economics 23 (5) (November): 585-610.

  • Epple, Dennis, Radu Filimon, and Thomas Romer.  1984. “Equilibrium Among Local Jurisdictions: Toward an Integrated Treatment of Voting and Residential Choice.” Journal of Public Economics 24 (3) (August): 281-308.

  • Epple, Dennis and G. Platt.  1998. “Equilibrium and Local Redistribution in an Urban Economy When Households Differ by Preferences and Income.” Journal of Urban Economics 43 (1) (January): 23-51.

Topic 17.   Hedonic Models: Step 1.

  • *S. Rosen, "Hedonic Markets and Implicit Prices,"  Journal of Political Economy, January/February 1974, pp. 34-55. 

  • *J. Yinger, “Hedonic Markets and Explicit Demands: Bid-Function Envelopes for Public Services and Neighborhood Amenities,”  pp. 1-4 and 15-21.  Posted on class Blackboard page.

  • S. Sheppard, "Hedonic Analysis of Housing Markets," in HURE-III. Available through class's Blackboard page.

  • Ivar Ekeland, James J. Heckman, and Lars Nesheim.  2004.  “Identification and Estimation of Hedonic Models.” Journal of Political Economy 112 (1, pt. 2): S60-S108.

  • Patrick Bajari and Matthew E. Kahn (2005), “Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities,” Journal of Business and Economic Statistics, 23(1) (January): 20-33.

 

Classic articles:

  • Dennis Epple.  1987.  “Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products.”  The Journal of Political Economy  95 (1) (February): 59-80.

 

Topic 18:  Hedonic Models: Step 2.

  • *J. Yinger, “Hedonic Markets and Explicit Demands: Bid-Function Envelopes for Public Services and Neighborhood Amenities,”  pp. 4-14.  Posted on class Blackboard page.

  • L. O. Taylor.  “Theoretical Foundations and Empirical Developments in Hedonic Modeling.”  In Hedonic Methods in Housing Markets: Pricing Environmental Amenities and Segregation, edited by Andrea Baranzini, José Ramirez, Caroline Schaerer, and Philippe Thalmann (New York: Springer: 2008): 15-54.

  • Patrick Bayer, Fernando Ferreira, Robert McMillan. 2007. “A Unified Framework for Measuring Preferences for Schools and Neighborhoods.” Journal of Political Economy 115 (4) (August): 558-638.

  • Dennis Epple and Holger Sieg.  1999.  “Estimating Equilibrium Models of Local Jurisdictions.”Journal of Political Economy 107 (4) (August ): 645-681. 

  • Patrick Bajari and Matthew E. Kahn (2005), “Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities,” Journal of Business and Economic Statistics, 23(1) (January): 20-33.

 

Topic 19:  Local Government Finance 5:  Property Tax Capitalization 

 

Topic 20:  Local Government Finance 6:  Public Service Capitalization 

Read at least one of the following:

  • R. Reback. "House Prices and the Provision of Local Public Services:  Capitalization Under School Choice Programs," JUE, March 2005, pp, 275-301.  

  • T. A. Downes and J. E. Zabel.  "The Impact of School Characteristics on House Prices: Chicago 1987-1991," JUE, July 2002, pp. 1-25. 

  • D. M. Brasington.  "Capitalization and Community Size," JUE, November 2001, pp. 385-395.

  • D. L. Weimer and M. J. Wolkoff, "School Performance and Housing Values:  Using Non-Continuous District and Incorporation Boundaries to Identify School Effects," National Tax Journal, June 2001, pp. 231-25.

  • S. E. Black. "Do Better Schools Matter?  Parental Valuation of Elementary Education," Quarterly Journal of Economics, May 1999, pp. 577-599. 

  • W. T. Bogart and B. Cromwell. 1997. "How Much More is a Good School District Worth?,"  National Tax Journal, June: pp. 215-232.

  • M. H. Hamadeh. Capitalization of Local Public Services into House Values, Ch. 4, "Capitalization of Local Public Services: Theory Estimation and Results," Ph.D. Dissertation, Syracuse University, August 1998.

 

Topic 21:  Local Government Finance 3:  Cost/Efficiency Equations (Not covered in class)

  • *William Duncombe and John Yinger.  "How Much More Does a Disadvantaged Student Cost?," Economics of Education Review, October 2005, pp. 513-532.  Available through e-journals at the SU library.

  • William Duncombe and John Yinger. 2008.  Making Do: State Constraints and Local Responses in California’s Education Finance System.” Unpublished Manuscript, Syracuse University, June.  Available through class's Blackboard page.

  • A. A. Reschovsky and J. Imazeki. "Let No Child Be Left Behind: Determining the Cost of Improving Student Performance." Public Finance Review, May 2003, pp. 263-290. 

  • T. Downes and T. Pogue. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, March 1994, pp.  89-110.   

  • D. Bradford. R. A. Malt, W. E. Oates. 1969. "The Rising Cost of Local Public Services: Some Evidence and Reflections." National Tax Journal, 22(2): 185-202. Available through class's Blackboard page.

 

Topic 22:  Local Government Finance 4:  Demand Equations (Not covered in class)

Trustee Professor of Public Administration and Economics