A Thematic History of Urban Economic Analysis

What is urban economics? ¹ I will refrain from torturing myself with this issue. Any definition will be too wide for some and too narrow for others. My definition will be simple, but appropriate for my interests and background: urban economics is scholarly writing that has specifically urban content and contains specifically economic analysis. Everyone will notice that my definition leaves room for judgment, which I will exercise freely.

My concern, as the title indicates, is with themes and only incidentally with authors. I propose to ask: What subjects has urban economics been concerned with, and how have they changed through time? What has been the division of labor between theoretical and applied research? And most important, with what subjects has progress been made, and what significant problems are still outstanding?

Where does one look for urban economics publications? One journal, the Journal of Urban Economics, whose twenty-fifth birthday 1999 was, has exactly that title. Two or three other journals have those or similar words in their titles. Several scholarly journals are devoted each to housing, transportation, and analysis of local government, and each such subject has a continuum of journals and magazines that blend into trade publications. Perhaps the most difficult distinction is between real estate analysis and urban economic analysis. Three or four scholarly journals are devoted to real estate and another three or four to housing and housing finance analysis. In addition, many journals are devoted to related subjects: urban planning, urban geography, regional science and economics, urban government, and so forth. Journals devoted to human resources, labor relations, poverty, and racial problems often contain urban economics articles. And of course urban economics research appears in general economics journals and in books, monographs, and reports of various kinds. Finally, as in the case of international capital flows, there is a home bias in a survey of urban economics. My home bias tells me that most urban economics is published in, or at least promptly translated into, English. But home bias is also geographical. Much urban economics is published in India, Japan, Korea, and other countries. One could certainly write a long survey of urban economics publications from or about India.

By definition, urban economics did not begin before economics, which I date with Adam Smith. In the nineteenth and early twentieth centuries, Johan Heinrich von Thünen, Walter Christaller, Henry George, August Lösch, and Alfred Marshall published more or less systematic urban economic analyses. ² In the first half of the twentieth century, the list is long enough to require a separate survey of the period. This particular survey arbitrarily covers only the second half of the twentieth century. Another home bias is that, professionally, I have lived through that period.

Many fine economists have written on urban economics. Some have been part-time urban economists, many have been full-time. Among the part-time workers have been several Nobel laureates. Beyond doubt, urban economics has benefited greatly from the writings of its part-time participants. Simon Kuznets had many insightful observations about urban growth in developing countries. Gary Becker provided the first definitive analysis of the economics of discrimination. A paper by Robert Solow and William Vickrey, and one by James A. Mirrlees, are among the finest and most influential in urban economics. Solow has contributed three or four excellent papers to urban economics, but I believe that the Mirrlees paper is the only one he has written on the subject. Vickrey wrote many papers on urban transportation pricing and investment. Stretching the boundaries of the subject would permit inclusion of Paul Samuelson, whose analysis, certainly spatial if not urban, has influenced urban research. Most recent is an important paper, I believe his first in urban economics, by Robert Lucas. ³

Other urban analyses by Nobel laureates appear somewhat...