What is urban economics?
“Urban Economics puts economics and geography together, exploring the geographical or location choices of utility maximizing households and prot maximizing rms. Urban economics also identies ineciencies in location choices and examines alternatie alternatie public policies to promote ecient choices.“ !" #ullian $%&&'( Urban $and )egional( Economics adds geographical space to economic analysis. *t recognizes that goods are produced and traded at certain locations. +hey are bought by indiiduals, ho lie at one and or- at another location. istance beteen economic actiities implies costs for for moi moing ng peop people le and and good goods. s. *t also also a/ec a/ects ts comm commun unic icat atio ion n and interaction among economic agents. 0 main focu focus s is land . 1and is immobile and associated ith a uni2ue location Urban Economics studies land use and land prices as a function of its location. *t is also lin-ed to Urban 3lanning, Urban #ociology, and Urban3olitics. Urban3olitics. *t proides a solid understanding of the economics of cities $and regions( and ho mar-et forces shape them.
*s broadly the economic study of urban areas as such, it inoles using the tools of economics to analize urban issue such as crime, education, public transit, housing, and local goernment nance. 4ore narroly, it is a brance of microeconomics that studies urban spatial structure and the location of households and rms......learn about monocentric city What is a city
3lace ith a relatiely high population density 5ensus denitions o Urban area6 minimum population 7 %,8&& Urban population6 people liing in urban urba n areas o 4etropolitan area6 at least 8&- people o o 4icropolitan area6 9&- to 8&- people o 3rincipal city6 largest municipality in metro area
Why do cities exist 5onditions for cities o 0gricultural surplus o Urban production to exchange for food o +ransportatio +ransportation n system for exchange exchange :acts on cities6 :igure 9;9, 9;%, 9;<= +ables 9;9, 9;%
0xiom of urban economics 3rices ad>ust to achiee locational e2uilibrium 1ocational e2uilibrium6 e2uilibrium6 o incentie to moe •
Examples of prices behind locational e2uilibrium o )ent on beach house @ )ent on highay house Wage in 5oolsille A Wage in ullsille o o 1and rent in center @ 1and rent on fringe •
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#elf;reinforcing e/ects generate extreme outcomes #elf;reinforcing e/ect6 leads to changes in same direction 0uto ro attracts comparison shoppers 5luster of artists attracts other artists Externalities cause ineciency Externality6 cost or benet of a transaction experienced by someone else External cost6 burning gasoline a/ects breathers External benet6 painting a peeling house increases property alues 3roduction is sub>ect to economies scale Economies of scale6 0erage cost decreases as 2uantity increases o o
*ndiisible inputs6 )e2uired to produce one or a thousand units :actor specialization6 Benets from continuity and repetition
Extent of scale economies aries across actiities
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5ompetition generates zero economic prot Entry into mar-et continues until economic prot is zero Economic cost includes explicit cost and opportunity cost of time and funds :irms earn >ust enough to stay in business, but not enough to attract entrants
perlu diingat, dalam ekonomi perkotaan, ada lima aksioma penting. •
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Pertama, harga akan menyesuaikan untuk mencapai keseimbangan lokasi atau locational equilibrium. Semakin jauh dari pusat kota semakin murah harga suatu barang dan jasa. Kedua, sebuah kota bersifat selfly enforcing. Hal ini dapat menjelaskan dengan fenomena back to the city. Pada mulanya orang-orang yang bekerja di kota memilih untuk bermukim di pinggiran kota. Hal ini dikarenakan akses menuju kota yang mudah dengan tersedianya akses jalan tol. Namun, lama-kelamaan masalah kemacetan muncul karena semakin banyak orang yang bermukim di pinggiran kota dan bekerja di kota jalan tol hanya solusi sementara atasi kemacetan!. Hal ini kemudian mendorong orang-orang untuk kembali bermukim di kota atau back to the city. Ketiga, eksternalitas menimbulkan inefisiensi. "ksternalitas dihasilkan saat tindakan seorang pelaku ekonomi berdampak pada pelaku ekonomi lainnya tanpa adanya kompensasi. Keempat, produksi bergantung pada skala ekonomi. Hal ini penting karena adanya indi#isible input input yang tidak bisa dibagi lagi! sehingga akan lebih menguntungkan jika memproduksi dalam jumlah besar agar indi#isible input tersebut tidak terbuang percuma. $asa truk pengangkut merupakan salah satu indi#isible input, akan lebih menguntungkan jika mengangkut dalam jumlah besar daripada sedikit karena biaya yang ditanggung akan sama saja. Kelima, kompetisi akan menghasilkan %ero economic profit, yaitu kondisi saat profit sama dengan opportunity cost. &ksioma ini seringkali terdengar di kuliah mikroekonomi. Kelima aksioma ini tentu amat berguna dalam menilik geliat ekonomi sebuah kota.
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5C. 8
Urban Growth
+his chapter explores the determinants of increases in urban income and employment. Cere are the main points of the chapter6
1. 0n increase in per;capita income results from capital deepening, increases in human capital, technological progress, and agglomeration economies.
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Capital deepening. 3hysical capital includes all the ob>ects made by humans to produce goods and serices, such as machines, e2uipment, and buildings. 5apital deepening is de ned as an increase in the amount of capital per or-erit increases productiity and income because each or-er or-s ith more capital.
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Increases in human capital. 0 personFs human capital includes the -noledge and s-ills ac2uired through education and experience. 0n increase in human capital increases productiity and income.
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Technological progress. 0ny idea that increases productiityfrom a or-erFs commonsense idea about ho to better organize production, to a scientistFs inention of a faster microprocessoris a form of technological progress. +he resulting increase in productiity increases income per or-er.
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Agglomeration economies. 3hysical proximity increases productiity through input sharing, labor pooling, labor matching, and -noledge spilloers. 5ities increase productiity and income because they bring the inputs to the production process together and facilitate face;to;face communication. 0ccording to 1ucas $%&&9(, cities are the engines of economic groth. 5ities income is di/erent ith cities froth rate
5ity;#pecic *nnoation and *ncome 9. Utility per Wor-er 7 *ncome ; 5ommuting 5osts. %. 0s city size increases, initially income increases faster than commuting costs increase, so utility per or-er rises. <. 0gglomeration economies are greater than the diseconomies associated ith commuting $noise, air pollution and congestion(. G. 0s city size continues to increase at some point utility decreases since the agglomeration economies are less than the diseconomies of commuting. 8. #uppose initial e2uilibrium is at point i, ith H million or-ers in each city and utility per or-er is IJ&. H. #uppose one of the to cities experiences technological adances that increase or-er productiity and income. +his cityKs utility cure shifts upard so that utility per or-er is IL& $point >( in the innoation city. J. Wor-ers in the other city migrate to the innoatie city. L. 4igration continues until utility and income is e2ual in both cities $IJ8 per or-er( at point s and b. '. Wor-ers in the innoatie city increases to J million, hile the number of or-ers falls in the other city to 8 million. 9&. +hus the benets of innoation in one city are spread to the other cities in the region. )egion;Wide *nnoation and *ncome
9. Both cities simultaneously get the same innoation. %. Utility cures of both cities shift upard and utility per or-er increases to IL& $point >( in both cities. <. o migration occurs and both cities retain H million or-ers. 2. 0n increase in export employment increases local employment through the multiplier process. 3. +he urban labor;supply cure is positiely sloped because a larger city has higher housing prices, re2uiring rms to pay higher ages to compensate or-ers for higher liing costs. 4. 0 large fraction of ne >obs in a city are lled by necomers, leaing fe >obs for original residents. 5. 0n increase in total employment in a city increases real income per capita by $ a ( hastening the moe up the >ob hierarchy and $ b ( increasing the labor;force participation rate.
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*f the economy is sub>ect to agglomeration economies, the 2uantity of labor demanded drops further :or a conentional demand cure, an increase in the age has to e/ects6 9. The substitution efect. 0n increase in the cityFs age causes rms to substitute other inputs $capital, land, materials( for the relatiely expensie labor. %. The output efect. 0n increase in the cityFs age increases production costs, increasing the prices charged by the cityFs rms. 5onsumers respond by purchasing less output, so rms produce less and hire feer or-ers. :or the urban labor mar-et, the presence of agglomeration economies adds a third e/ect of an increase in the age. <. Agglomeration efect. 0n increase in the age and the resulting decrease in the 2uantity of labor demanded reduces agglomeration economies and decreases labor productiity, causing an additional decrease in the 2uantity of labor demanded.
Shiting the rban !abor "emand Cur#e •
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"emand or e$ports. 0n increase in the demand for the cityFs exports increases export production and shifts the demand cure to the right6 0t eery age, more or-ers ill be demanded. !abor producti#it%. 0n increase in labor productiity decreases productioncosts, alloing rms to cut prices, increase output, and hire more or-ers. 0s e sa earlier in the chapter, labor productiity increases ith capital deepening, technological progress, increases in human capital, and agglomerationeconomies. &usiness ta$es. 0n increase in business taxes $ithout a corresponding change in public serices( increases production costs,
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hich in turn increases prices and decreases the 2uantity produced and sold, ultimately decreasing the demand for labor. Industrial public ser#ices. 0n increase in the 2uality of industrial public serices $ithout a corresponding increase in taxes( decreases production costs and thus increases output and labor demand. !and'use policies. *ndustrial rms re2uire production sites that $ a ( are accessible to the intracity and intercity transportation netor-s and $ b ( hae a full set of public serices $ater, seerage, electricity(. By coordinating its land;use and infrastructure policies to ensure an ade2uate supply of industrial land, a city can accommodate existing rms that ant to expand their operations and ne rms that ant to locate in the city.
($port #ersus !ocal (mplo%ment and the )ultiplier We can deide production in the urban economy into to types6 Export6 sold to people outside the city for example steel, cement etc. 1ocal6 sold ithin the people of the city here the goods are produced. 0nd total employment is the total of labor input to produce export and local goods. +he increase in export employment leads to increases in local employment. +he increase in total employment exceeds the initial increase in export employment. • •
+he demand for labor comes from rms in the city, hile supply comes from households liing in the city
CHAPTER 7 Land-Use Patterns Modern metropolitan area jobs devided into: 1. Central bussisiness district 2. Suburban subcenters 3. Everywhere else
Since most jobs are spread in the centre of the city we describe the spatial distributions of employment and population within cities Since we !now that the land price in the centre of the city is e"pensive because of the e"istence of competition in ownin# land most of wor!ers are lives away the city centre... $e%ll e"plore the mar!et forces behind the transformation of cities and discuss the causes and conse&uences of urban sprawl. THE SPATIAL DISTRIBUTION OF EMPLOYMENT
9. Mobs *nside and !utside the 5entral 0rea %. 0 5loser 1oo- at the #patial istribution of Mobs <. Employment #ubcenters ' Mixed-industria su!"enters started out as low(density manufacturin# areas near a transport node )airport port or marina* and #rew as they attracted other activities. ' Mixed-ser#i"e su!"enters$ li!e traditional downtowns provide a wide ran#e of services and many functioned as independent centers before they were absorbed into the metropolitan economy. ' S%e"iai&ed-'anu(a"turin) su!"enters include old manufacturin# areas as well as newer areas near airports that produce aerospace e&uipment. ' Ser#i"e-*riented su!"enters employ wor!ers in service activities such as medical care entertainment and education. ' S%e"iai&ed entertain'ent su!"enters employ wor!ers in television and fi lm. G. +he Spatial ,istribution of -ffi ce Employment and -ffi ce Space . +he /ole of Subcenters in the Metropolitan Economy THE SPATIAL DISTRIBUTION OF POPULATION 1. Commutin# patterns THE RISE OF THE MONOCENTRIC CITY
3eta industri bandung
