The Zoom City: Working From Home, Urban Productivity and Land Use

E-print/Working paper (2022)

Who will benefit and who will lose from a permanent increase in working from home (WFH)? This paper investigates the impact of WFH on cities of different sizes, highlights the dangers of too much WFH, and ... [more ▼]

Who will benefit and who will lose from a permanent increase in working from home (WFH)? This paper investigates the impact of WFH on cities of different sizes, highlights the dangers of too much WFH, and discusses aspects of the disagreement between workers and firms. Our results suggest that WFH raises urban productivity and average wages only in large cities. We also study the optimal fraction of WFH and show that workers-residents have incentives to adopt an inefficiently high WFH scheme. The implementation of remote work in the short run---at fixed rents and wages---implies higher benefits for long-distance commuters and lower benefits or even losses for short-distance ones. It also implies benefits for some firms and losses for others, which potentially explains the low prevalence of WFH before the pandemic. Finally, we show that advances in digital technology, which increase the productivity of remote workers, lead to increased welfare benefits. A calibration exercise for the average and the largest European capital cities sheds more light on the impact of WFH on cities of different sizes. [less ▲]

COVID-19 Crisis Management in Luxembourg: Insights from an Epidemionomic Approach

in Economics and Human Biology (2021), 43

We develop an epidemionomic model that jointly analyzes the health and economic responses to the COVID-19 crisis and to the related containment and public health policy measures implemented in Luxembourg ... [more ▼]

We develop an epidemionomic model that jointly analyzes the health and economic responses to the COVID-19 crisis and to the related containment and public health policy measures implemented in Luxembourg. The model has been used to produce nowcasts and forecasts at various stages of the crisis. We focus here on two key moments in time, namely the deconfinement period following the first lockdown, and the onset of the second wave. In May 2020, we predicted a high risk of a second wave that was mainly explained by the resumption of social life, low participation in large-scale testing, and reduction in teleworking practices. Simulations conducted 5 months later reveal that managing the second wave with moderately coercive measures has been epidemiologically and economically effective. Assuming a massive third (or fourth) wave will not materialize in 2021, the real GDP loss due to the second wave will be smaller than 0.4 percentage points in 2020 and 2021. [less ▲]

Quality and Trade with Many Countries and Industries

Scientific Conference (2021, October)

This paper investigates a trade model with many countries, many goods produced in multiple quality versions and non-homothetic preferences. It studies the impact of productivity, population changes and ... [more ▼]

This paper investigates a trade model with many countries, many goods produced in multiple quality versions and non-homothetic preferences. It studies the impact of productivity, population changes and trade costs on the quality composition of exports. The analysis embeds within the same model a series of empirical results about high-income countries specialization and trade in higher quality goods. Product di¤erentiation matters at explaining the volumes of trade quality. High-quality goods exhibiting a high degree of di¤erentiation are traded only by high-income countries. [less ▲]

Geographical Stratification of Green Urban Areas

in Journal of Economic Geography (2021)

This article studies the provision of urban green areas in cities where residents have preferences for the size of and access to those areas. At the optimum, the number of urban green spaces is a ... [more ▼]

This article studies the provision of urban green areas in cities where residents have preferences for the size of and access to those areas. At the optimum, the number of urban green spaces is a nonmonotone function of distance to the city center, while the sizes and distances to other urban green areas increase as one moves to the urban fringe. This article empirically investigates those properties for the 300 largest European cities by using the Global Monitoring Environment Services Urban Atlas database (European Environmental Agency). The empirical analysis confirms the nonmonotone relationship between the number of urban green spaces and the distance to the city center. The distance between two parks also increases as one moves toward the urban fringe. [less ▲]

Effect of conformism on firm selection, product quality and home bias

in Journal of Economic Behavior and Organization (2021), 185

This paper investigates the impact of local traffic pollution on the formation of residential and business districts. While firms benefit from local production externalities, households commute to their ... [more ▼]

This paper investigates the impact of local traffic pollution on the formation of residential and business districts. While firms benefit from local production externalities, households commute to their workplaces with private vehicles and exert a local pollution externality on the residents living along the urban transport networks. The spatial location of firms and residents endogenously results from the trade-off between the production and pollution externalities and the commuting costs. The analysis shows that in monocentric cities the benefits associated with a fall in per-vehicle pollution are absorbed by rents paid to absentee landlords. When a city includes business and residential districts as well as a district mixing both agents, a lower per-vehicle pollution enlarges the residential districts and shifts the business districts closer to the geographical center of the city. The paper finally studies the optimal city structure. The first-best policies that fully internalize the externalities still foster business agglomeration. [less ▲]

Local Social Interaction and Urban Equilibria

in Mathematical Social Sciences (2021), 112

In this paper we investigate the effect of local interaction in a simple urban economics model. Agents interact with others if and only if their interaction benefit outweighs their travel cost and ... [more ▼]

In this paper we investigate the effect of local interaction in a simple urban economics model. Agents interact with others if and only if their interaction benefit outweighs their travel cost and therefore meet others only within finite geographic windows. We show that two or more cites may co-exist at the equilibrium provided that they are sufficiently distant. For any interaction surplus function, there exists a unique spatial equilibrium on not too large city supports. The population density within a city is determined by a second order advance-delay differential equation, whose solutions are fully characterized for linear interaction surplus functions. Numerical analyses show that more localized interactions yield flatter population density and land rents over larger extents of the city support. They do not give support to the idea that multiple subcenters can be caused by small and finite geographic windows of interaction. [less ▲]

The Contribution of New Economic Geography.

in Oxford Research Encyclopedia of Economics and Finance (2020)

New Economic Geography (NEG) provides micro-economic foundations for explaining the spatial concentration of economic activities across regions, cities, and urban areas. The origins of the NEG literature ... [more ▼]

New Economic Geography (NEG) provides micro-economic foundations for explaining the spatial concentration of economic activities across regions, cities, and urban areas. The origins of the NEG literature trace back to trade, location, and urban economics theories. In NEG, agglomeration and dispersion forces explain the existence of spatial agglomerations. A NEG model usually incorporates a combination of such forces. In particular, firm proximity to large markets and the importance of linkages along a supply chain are typical agglomeration forces. Equilibria properties derived from NEG models are very specific to NEG as they involve multiple equilibria and have a very high dependence on changes in parameters. This phenomenon has important implications for the emergence of nations, regions and cities. In particular, high transport costs imply the dispersion of economic activities, while low transport costs lead to their spatial concentration. The same forces that shape inequalities and disparities between regions also shape the internal structure of cities. Firms concentrate in urban centres to gain greater access to larger demand. The empirical literature has developed several approaches that shed light on spatial agglomeration and estimate the role and impact of transport costs on market access. A key empirical research question is whether observed patterns could be explained by location amenities or agglomeration forces as put forward by NEG. Quasi-experimental methodology is frequently used for such a purpose. NEG theory is supported by empirical evidence, demonstrating the role of market access. [less ▲]

Currency areas and voluntary transfers

in Journal of International Economics (2020), 127(C),

Fiscal integration is recognized as an important issue in determining whether countries establish a common currency area. Fiscal integration between sovereign states is, however, limited by the ability of ... [more ▼]

Fiscal integration is recognized as an important issue in determining whether countries establish a common currency area. Fiscal integration between sovereign states is, however, limited by the ability of countries to commit to fiscal transfers. This paper supposes that fiscal transfers between countries must be voluntary and asks how this influences the choice between a currency area and a flexible exchange rate regime. It presents a model with wage rigidity in which, absent transfers, the flexible exchange rate regime is preferred. If there are transfers that equalize consumption, then the choice of exchange rate regime is irrelevant. Nevertheless, the currency area may be preferable if transfers are made voluntarily, because the currency area can sustain greater risk sharing. It is shown that the currency area can be optimal for a plausible set of parameter values. We consider the robustness of the conclusions to some modifications of the model. [less ▲]

Geographical Stratification of Green Urban Areas

E-print/Working paper (2020)

This paper studies the provision of urban green areas in cities when residents havepreferences for the size of and access to those areas. At the optimum, the number ofurban green spaces is a non-monotone ... [more ▼]

This paper studies the provision of urban green areas in cities when residents havepreferences for the size of and access to those areas. At the optimum, the number ofurban green spaces is a non-monotone function of distance to the city centre, whilethe sizes and distances to other urban green areas increase as one moves to the urbanfringe. This paper empirically investigates those properties for the 300 largest Europeancities by using the GMES Urban Atlas database (European Environmental Agency).The empirical analysis confirms the non-monotone relationship between the numberof urban green spaces and the distance to the city centre. The distance between twoparks also increases as one moves toward the urban fringe. Finally, richer cities areassociated with a denser network of urban green areas. [less ▲]

Local Social Interaction and Urban Equilibria

E-print/Working paper (2019)

In this paper we investigate the effect of local interaction in a simple urban economics model. Agents interact with others if and only if their interaction benefit outweights their travel cost and ... [more ▼]

In this paper we investigate the effect of local interaction in a simple urban economics model. Agents interact with others if and only if their interaction benefit outweights their travel cost and therefore meet others only within finite geographic windows. We show that two or more cites may co-exist at the equilibrium provided that they are sufficiently distant. For any interaction surplus function, there exists a unique spatial equilibrium on not too large city supports. The population density within a city is determined by a second order advance-delay differential equation, whose solutions are fully characterized for linear interaction surplus functions. Numerical analyses show that more localized interactions yield flatter population density and land rents over larger extents of the city support. They do not give support to the idea that multiple subcenters can be caused by small and finite geographic windows of interaction. [less ▲]