The Skyscrapers Revolution: Global Economic Development and Land Savings
Abstract:
Tall buildings are central to facilitating sustainable urbanization and growth in cities worldwide. We estimate average elasticities of city population and built area to aggregate city building heights of 0.12 and -0.17, respectively, indicating that the largest global cities in developing economies would be at least one-third smaller on average without their tall buildings. Land saved from urban development by post-1975 tall building construction is over 80% covered in vegetation. To isolate the effects of technology-induced reductions in the cost of height from correlated demand shocks, we use interactions between static demand factors and the geography of bedrock as instruments for observed 1975-2015 tall building construction in 12,877 cities worldwide, a triple difference identification strategy. Quantification using a canonical urban model suggests that the technology to build tall generates a potential global welfare gain of 4.8%, of which only about one-quarter has been realized. Estimated welfare gains from relaxing existing height constraints are 5.9% in the developed world and 3.1% in developing economies.
About Gabriel Ahlfeldt:
Gabriel Ahlfeldt holds the Chair of Econometrics at the School of Business and Economics at Humboldt University in Berlin. He is also faculty if the Berlin School of Economics, a visiting Professor at the London School of Economics, an affiliate of CEPR, and CESifo. As of to date, Gabriel Ahlfeldt has published 47 articles in leading peer-refereed journals, most of which relate to a spatial phenomenon. His article “The economics effects of density: Evidence from the Berlin wall” (joint with Stephen Redding, Daniel Sturm and Nikolaus Wolf) was the first urban economics paper to win the Frisch Medal awarded by the Econometric Society. He is editor of Regional Science and Urban Economics and an associate editor of the Journal of Regional Science. For further detail, visit www.ahlfeldt.com. You can also follow @Ahlfeldt on Twitter.
Language: English
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