Density, productivity, and housing prices

Ryan Avent recently spoke at the Kauffman Foundation‘s conference for economic bloggers. His short presentation touches on a number of economic issues as they relate to urban economies and their role in our national economy.

The presentation tackles Tyler Cowen’s Great Stagnation thesis.  Avent specifically looks at the benefits of density on productivity and innovation, and how the dispersal of the American population has had a disparate impact on American productivity.

The implications for cities are clear – the dense areas (owing to the benefits of agglomeration and economies of scale) are extremely productive, but they’ve not been the areas seeing growth in recent decades.  Instead, the less-dense places in the sun belt have grown.  Avent attributes this to the sun belt’s ability to expand supply and keep housing costs low (citing Ed Glaeser).  The implication is that the low cost of living is attracting people to areas that are less productive than the dense but hard-to-expand coastal cities.

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