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How does the household structure shape the urban economy?

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  • Tscharaktschiew, Stefan
  • Hirte, Georg
Abstract
Households in real cities are heterogeneous regarding their size and composition. This implies that the household structure - i.e. the (average) household size, the composition, the relative share of different household types, and the number of households - differs across cities. This aspect is usually completely neglected in urban models used to study economic and policy issues that arise in today's cities. Furthermore, the household structure might change over time. For instance, over the last decades average household size has decreased in many countries. Several implications of this change have been discussed, but usually not in regard to an urban economy with its interdependencies. We develop an applied urban general equilibrium model (based on Anas and Xu, 1999 or Anas and Rhee, 2006) which explicitly takes the household structure into account and thus allows studying the impacts of differences in the household structure on urban areas. The paper shows that the household structure affects an urban economy and its spatial pattern in various ways and may contribute to explain economic and spatial effects on cities and differences across cities. Compared to a 'Base City' which reflects the actual household structure in the United States, urban labor force participation, housing demand, rents, wages as well as urban commuting and shopping patterns are considerably affected by, e.g., differences in the average household size in a city. For instance, wage inequality between differently skilled workers raises and extreme cross commuting drops to almost zero when the city turns into a 'Singles City'. Hence, pure economic forces associated with the household structure may shape cities in a different way, implying that the impacts of urban policies may depend on the household structure and therefore differ across cities.

Suggested Citation

  • Tscharaktschiew, Stefan & Hirte, Georg, 2010. "How does the household structure shape the urban economy?," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 498-516, November.
    • Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:498-516
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    Citations

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    Cited by:

    1. Hirte, Georg & Tscharaktschiew, Stefan, 2018. "The impact of anti-congestion policies and the role of labor-supply margins," CEPIE Working Papers 04/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    2. Georg Hirte & Ulrike Illmann, 2019. "Household decision making on commuting and the commuting paradox," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(1), pages 63-101, February.
    3. Hirte, Georg & Tscharaktschiew, Stefan, 2020. "The role of labor-supply margins in shaping optimal transport taxes," Economics of Transportation, Elsevier, vol. 22(C).
    4. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
    5. Georg Hirte & Stefan Tscharaktschiew, 2015. "Why not to choose the most convenient labor supply model? The impact of labor supply modeling on policy evaluation," ERSA conference papers ersa15p303, European Regional Science Association.
    6. Uwe Blien & Stefan Fuchs & Georg Hirte, 2013. "New advances in the analysis of regional labour markets," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 243-248, June.
    7. Wrede, Matthias, 2014. "Continuous Logit Polycentric City Model," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100488, Verein für Socialpolitik / German Economic Association.
    8. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    9. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics 02/11, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    10. Wrede, Matthias, 2015. "A continuous spatial choice logit model of a polycentric city," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 68-73.
    11. Dröes, Martijn I. & Rietveld, Piet, 2015. "Rail-based public transport and urban spatial structure: The interplay between network design, congestion and urban form," Transportation Research Part B: Methodological, Elsevier, vol. 81(P2), pages 421-439.
    12. Nitzsche, Eric & Tscharaktschiew, Stefan, 2013. "Efficiency of speed limits in cities: A spatial computable general equilibrium assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 56(C), pages 23-48.
    13. Vincent Viguié, 2015. "Cross-commuting and housing prices in a polycentric modeling of cities," Policy Papers 2015.03, FAERE - French Association of Environmental and Resource Economists.
    14. Wrede, Matthias, 2017. "Urban land use, sorting, and population density: A continuous logit model," Transportation Research Part B: Methodological, Elsevier, vol. 101(C), pages 283-294.
    15. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, vol. 40(C), pages 515-528.

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    More about this item

    Keywords

    General equilibrium Household structure Household size Location Commuting;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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