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Full-Text Articles in Urban Studies and Planning
The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman
The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman
Matthew Freedman
We use longitudinal establishment data to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. Consistent with previous studies, we find an elasticity of average establishment earnings with respect to metropolitan area population of 0.03, controlling for the endogeneity of location and establishment and metropolitan area characteristics. More importantly, we find that the estimated density premium is realized almost entirely at entry and is constant over an establishment’s life. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density premium. We interpret …