Beautiful City: Leisure Amenities and Urban Growth

March 2019

WP 19-16 - Modern urban economic theory and policymakers are coming to see the provision of consumer-leisure amenities as a way to attract population, especially the highly skilled and their employers.

Supersedes Working Paper 08-22 - City Beautiful

However, past studies have arguably only provided indirect evidence of the importance of leisure amenities for urban development. In this paper, we propose and validate the number of tourist trips and the number of crowdsourced picturesque locations as measures of consumer revealed preferences for local lifestyle amenities. Urban population growth in the 1990-2010 period was about 10 percentage points (about one standard deviation) higher in a metro area that was perceived as twice more picturesque. This measure ties with low taxes as the most important predictor of urban population growth. “Beautiful cities” disproportionally attracted highly educated individuals and experienced faster housing price appreciation, especially in supply-inelastic markets. In contrast to the generally declining trend of the American central city, neighborhoods that were close to central recreational districts have experienced economic growth, albeit at the cost of minority displacement.

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