Cities and the Urban Land Premium
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Cities and the Urban Land Premium

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

After a long period of suburbanisation, cities have been in vogue again since the 1980s. But why are people prepared to spend far more money on a small house in the city than on a large house in the countryside – and why doesn't this apply to all cities? This book shows that the appeal of the city in the 21st century is not only determined by the production side of the economy, but also by the consumption side: its array of shops, cultural activities and, for example, an historic city centre. All these factors not only translate into land prices that are worlds apart but, in terms of production, into different wages for urban and rural citizens. This book maps out these differences.
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Chapter 4: The production city

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

Extract

In almost all countries, there is a constant migration towards the towns. The large towns . . . absorb the very best blood from all the rest . . . the most enterprising, the most highly gifted, those with the highest physique and the strongest characters go there to find scope for their abilities. Alfred Marshall, 1890. More money is earned within urban agglomerations than outside. At first glance, this could simply be explained by the uneven spatial distribution of economic activity and people. Top jobs, that require great knowledge and experience, are concentrated in the Randstad area. Routine tasks that can be performed by lower-educated staff are, by contrast, overrepresented in the rural areas. Higher-qualified workers are obviously better paid, so the average wages in the Randstad are higher. The reality, however, proves to be more complex: a random worker from the rural province of Friesland or Groningen will, on average, earn around 10 per cent more in Amsterdam. Even with equal qualifications a worker in the Randstad earns more than in rural areas. Wage differences that cannot be explained by individual characteristics of workers and companies also exist between other Dutch regions, and given the relatively small size of the Dutch economy, these differences are considerable.

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