Thursday, June 14, 2007

The plot thickens

Cities around the world have been decentralizing for as long as we have data. The reasons are fairly simple and obvious but there is some controversy over the role of policies. Some, who look at suburbanization in the U.S., link it to peculiar U.S. policies (special tax treatment of homeownership, low gasoline prices, interstate highways, etc.).

Others point to similar suburbanization in other countries with vastly different policies and conclude that preferences trump policies. My colleagues and I have looked at Canadian data and found similar decentralization trends compared to the U.S.. Wendell Cox has visited probably all the major cities of the world and found same.

Now comes Nathanial Baum-Snow's "Did Highways Cause Sububanization" (QJE, May 2007). He finds that, "had the interstate highway system not been built, instead of declining by 17 percent, the aggregate [U.S.] central city population would have grown by 8 percent." He finds that his econometric results are robust.

The plot thickens.