Academic journal article Chicago Fed Letter

Should Governments Try to Control Suburban Growth?

Academic journal article Chicago Fed Letter

Should Governments Try to Control Suburban Growth?

Article excerpt

Should governments try to control suburban growth?

Many people believe that suburbanization, or urban sprawl, to use the pejorative term, is excessive in most U.S. metropolitan areas. This Chicago Fed Letter examines the reasons for this belief and concludes that it is misplaced. In my view, the issue is that governments have drastically mispriced metropolitan transportation facilities. Appropriate pricing would reduce driving, but would not have dramatic spatial effects.

The popular measure of suburbanization is increases in the percentages of metropolitan residents who live and work outside the central city, or cities, as the metropolitan population grows.1,2 Every large metropolitan area in the world for which data are available has suburbanized for at least half a century.3 The presently industrialized countries (members of the Organization for Economic Cooperation and Development) have suburbanized for a century or more. Since about 1950, U. S. metropolitan areas have suburbanized faster and farther than those in most countries. In 1950, some 57% of metropolitan population and 70% of employment were in central cities; in the mid-1990s, the percentages were about 30% to 35% and 40% to 45%.4 Economists and others have studied the reasons for suburbanization for about 40 years. There is widespread agreement as to the causes, but disagreement persists as to their relative importance.

First and most widely agreed upon is size. Large metropolitan areas are more suburbanized than small metropolitan areas the world over. It would be nearly impossible and prohibitively expensive to locate most of a large metropolitan area's employment in a contiguous central business district (CBD) and to provide housing and transportation so that workers could commute between home and work at reasonable cost and time. As a consequence, small suburban centers typically develop within 5 miles to 25 miles of CBDs in large metropolitan areas to replicate the CBT) on a smaller scale.

A second reason for suburbanization is high incomes. As incomes rise, residents' demands for housing (both size and quality) and, therefore, land rise almost proportionately. Thus, many residents, especially high-income residents, disperse to suburbs where land and, therefore, housing are relatively cheap. When residents suburbanize, businesses that serve them also suburbanize. Likewise, suburbanization of their employees induces employers to suburbanize. And, of course, suburbanization of employment induces workers to suburbanize to be near their jobs.

Manufacturing is a separate case. This sector suburbanized before most workers and other businesses, largely due to the shift of intercity and interregional goods movement from ships and trains to roads, especially after the development of large diesel engine trucks, refrigerated trucks, and highquality interregional roadways. Central city racial tensions, crime, and poor schools are not major causes of suburbanization, as evidenced by the fact that suburbanization pervades other countries where such problems are less persistent and that U.S. suburbanization started long before the massive migration of minorities from southern farms and abroad after World War II. U.S. metropolitan areas whose inner cities have large concentrations of poor minorities appear to be somewhat more suburbanized than those with smaller concentrations of inner city poor. Nevertheless, U.S. racial problems have had a greater effect on who suburbanizes than on how many people suburbanize.

Achieving appropriate metropolitan densities

A large modern metropolitan economy consists of large numbers of specialized firms and workers. Specialization entails the movement of massive amounts of goods, labor, and information. Efficient exchanges require an elaborate transportation and communication infrastructure. The proximity of diverse businesses and workers is precisely the justification for large metropolitan areas. …

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