The Auckland productivity premium

The Motu Institute recently published new research into the urban productivity premium in New Zealand, or the degree to which firms and workers in big cities tend to produce more and earn higher wages. This is an essential issue for urban and transport policy as it gets to the heart of why we have cities. As we’ve discussed in the past, cities offer opportunities for better connections between firms, workers, and customers, leading to better economic outcomes. (Economists usually describe this as agglomeration economies.) In the paper – with the enthralling title of “Urban productivity estimation with heterogeneous prices and labour” – researcher Dave Maré sets out to update and …
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Optimal heritage zoning: an empirical perspective

Back in July, I went down to Wellington for this year’s New Zealand Association of Economists conference. I really enjoy NZAE – people attend because they’re genuinely excited about sharing their ideas and learning from other people. (Stu Donovan and John Polkinghorne were also there.) I was presenting a paper on using hedonic analysis of property sales to assess and compare the costs and benefits of planning regulations. The empirical side of the paper was an analysis of the impact of dwelling size, lot size, location, and amenities such as the presence of old buildings on property sale prices. I used these results to consider the rationale for heritage preservation …
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Isolated in the quarter-acre pavlova paradise?

The other week, the NZ Herald reported on some new research into Kiwis’ sense of social connectedness. The results, unfortunately, are fairly dismal: New research has found that New Zealanders are losing touch with their neighbours – and it’s affecting our wellbeing. In the recently released results of the Sovereign Wellness Index, New Zealand trailed behind other countries when it came social connections and community, with our neighbourly relations particularly lacking. “We came last when compared to 29 European countries that deployed the same survey, which is not only a disappointing result but, when compared to the first Sovereign Wellbeing Index in 2013, it shows no improvement,” said Grant Schofield …
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The moral case for immigration

In a post several weeks back, I talked about the economic case for immigration and population growth. In it, I hypothesised that: New Zealand has a strong feedback loop between net migration and economic growth. When growth prospects get worse – as they did in the 1970 and 1980s – it dissuades people from coming here and encourages Kiwis to leave for greener pastures. This in turn worsens growth prospects by sucking consumer demand out of the economy and reducing perceived household wealth (i.e. lowering house prices). By contrast, good growth prospects tend to attract migrants to New Zealand’s cities and encourage potential emigrants to stay. This in turn leads …
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Can public transport save households money?

People sometimes argue that we should provide more public transport because it will reduce households’ transport costs. But is that actually true? I took a look at this issue in a recent working paper on Location Affordability in New Zealand Cities that I presented at the 2014 New Zealand Association of Economists conference. In that paper, I found that: …housing costs tend to fall with increasing distance from city centres, while commute distances, which drive variable transport costs, tend to increase. All other things being equal, higher rates of public transport use did not appear to improve transport affordability due to the fact that New Zealand’s public transport fares are …
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The importance of housing choices in cities

Good cities should provide choices to their inhabitants. Any big (or small!) city is composed of a variety of people with various preferences, needs, and budgets. Look around you: Aucklanders are a bloody diverse bunch, and we’re getting more so as I type these words. The Aucklanders of the future will want to get around in different ways, live in different places, and entertain themselves in different ways. In fact, this is already happening. It’s the reason for the success of the innovative mixed-use developments on the waterfront, the runaway success of Britomart and other rail upgrades, and, on the flip side, declines in vehicle kilometres travelled per capita. At …
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Location affordability in New Zealand cities – is greenfield growth really affordable?

Several weeks ago I attended the annual New Zealand Association of Economists conference in Auckland. Geoff Cooper, Auckland Council’s Chief Economist, had organised several sessions on urban issues, and as a result there was a lot of excellent discussion of urban issues and Auckland’s housing market. You can see the full conference programme and some papers here. At the conference, I presented some new research on housing and transport costs in New Zealand’s main urban areas. My working paper, enticingly entitled Location Affordability in New Zealand Cities: An Intra-Urban and Comparative Perspective, can be read in full here (pdf). Before I discuss the results, I’d like to thank my employer, …
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