Hans Koster (Vrije Universiteit Amsterdam, VU)
Amenities and the Social Structure of Cities
Carl Gaigné, Hans R.A. Koster, Fabien Moizeau and Jacques-François Thisse
We develop a new model of a "featureful" city in which locations are differentiated by two attributes, that is, the distance to employment centers and the accessibility to given amenities, and we show how heterogeneous households in income are sorted out across the urban space. The residential equilibrium involves the spatial separation of households sharing similar incomes because the spatial sorting of households is no longer driven by the sole distance to employment centers. Under Stone-Geary preferences, amenities and commuting are subsumed into a location-quality index. Hence, the assignment of households to locations becomes one-dimensional and the income mapping may be fully characterized. Using Dutch microdata on the polycentric city of the Randstad (including Amsterdam and Rotterdam), we show that there is a causal relationship between the amenity level, commuting time and consumer income, suggesting that richer households sort themselves into high-amenity, well-accessible locations.