The Persistence of Urban Decline

WIFO Research Seminar

Organised by: Austrian Institute of Economic Research (WIFO)

Speaker:
Hans Koster (Vrije Universiteit Amsterdam)

Language: English

WIFO, Helene-Lieser-Saal or via Microsoft-Teams

Hans Koster and Gabriel Loumeau argue that urban decline persists due to the interaction between sorting and the durability of the housing stock. Using the history of coal production in France's largest mining basin as a negative economic shock to local employment, they examine its effect on urban decline.

Participation via MS Teams

The basin's geological boundaries and the proximity of housing to mines allow them to exploit local variation in sorting and housing quality. They find that housing prices today drop by 8.5 percent when entering the basin. This decline is attributable to lower housing quality and to sorting effects. A dynamic spatial equilibrium model with forward-looking developers suggests that urban decline can persist for many decades before reaching a new steady state, leading to increased welfare inequality between low-skilled and high-skilled households in the area.

Please be aware that this seminar will be recorded and published digitally.