II.
Urban Growth and Land Use Patterns
A. Urban Economic Growth
- Economic growth - increase in
total employment
1. Labor market
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a. Demand for labor
- Export (basic)
sector - sells products to consumers
outside the city
- Local (nonbasic)
sector - sells products to consumers
within the city
- Money brought in by
export sector respent in local sector
=> multiplier effect
- Factors causing shifts
in labor demand:
(1) Demand for exports
- Increased demand
=> increased export production,
increased demand for labor
(2) Labor productivity
- Increased
productivity => production costs
decrease, prices decrease, more
output (including exports) sold,
increased demand for labor
(3) Business taxes
- Increased business
taxes => increased production
costs, decreased output, decreased
demand for labor
(4) Industrial public
services
- Increased
industrial public services =>
decreased production costs, increased
output, increased demand for labor
(5) Land-use policies
- More land made
available => more firms willing to
locate in city, increased demand for
labor
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b. Supply of labor
- Positively sloped
because of migration effect -
increased wage makes city more
attractive, causing migration from other
cities
- Factors causing shifts
in labor demand:
(1) Environmental
quality
- Increased
environmental quality => increased
migration, increased supply of labor
(2) Residential taxes
- Increased taxes
=> city less attractive, decreased
supply of labor
(3) Residential public
services
- Increased services
(or quality) => city more
attractive, increased supply of labor
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3. Public policy and economic
growth
Subsidy programs:
a. Tax abatement
- New firms exempt from
taxes (usually property) for a period of
time
b. Industrial bonds
- Local government
issues bonds, buys and improves land,
leases land to firms at reduced rate
c. Government loans and
loan guarantees
- Money loaned to firms
or local government guarantees loans by
private firms
d. Site development
- Local government buys
land, clears site, builds infrastructure,
then sells land at a fraction of cost to
private firms
4. Urban growth and
environmental quality
How will programs to
improve environmental quality affect urban
growth?
- Improved environmental
quality => higher production costs,
reduced output, reduced demand for land
- Improved environmental
quality => city more attractive,
increase supply of labor
- Net effect could go
either way:
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(To be
continued)
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