URBAN ECONOMICS EC / USP 431 Portland State University: Fall 2011 Professor Eric Fruits School of Urban Studies and Planning Portland State University [email protected]

Clay 204 Tuesdays & Thursdays 4:00 – 5:50 pm Office Hours: by appointment Tel: 503-928-6635

This course studies the functions of the urban economy: the market sector and the public sector. Economic analysis of issues such as land use, environmental quality, transportation, housing, income distribution, and financing of urban public services. Recommended: Ec 201 (Principles of Microeconomics) and Ec 202 (Principles of Macroeconomics). USP 431 and Ec 431 are the same course. (4 credits) Note:

The instructor, and only the instructor, reserves the right to change the contents of this syllabus at any time.

MATERIALS The following textbooks is required. Other associated reading are listed on the class schedule. Students are expected to have reviewed all readings before class meetings. Additional reading may be assigned throughout the term. Questions regarding information from the textbook and other reading may appear on examinations. Arthur O’Sullivan, Urban Economics, 7th ed., McGraw-Hill Irwin, 2009 (denoted “O’Sullivan” in the associated readings). The 6th edition may be a suitable substitute, however all assignments are based on the 7th edition’s content. Henry Hazlitt, Economics in One Lesson, Pocket Books, 1952, available free at http://tinyurl.com/onelesson (denoted “Hazlitt” in the associated readings). The instructor has begun an urban economics blog. Postings and links on the blog may appear on examinations. The URL for the blog is: http://www.urbanecon.net/ Students who desire some more basic economic understanding of the topics covered in this course should review any “Principles” textbook. Other associated readings are available electronically free of charge to PSU students. The best source is Google Scholar: http://stats.lib.pdx.edu/dofd.php?url=http://scholar.google.com. If you use the link provided, you will be prompted for your Odin username and password. Once you are at the Google Scholar screen, type in the article name, then click on “Find It @ PSU”. GRADING Grades in the course will be based on the following criteria:

Integrity/class participation Midterm examination Final examination

The higher of (1) or (2) 25% 25% 25% 50% 75%

Suggested exercises: Throughout the term, the instructor will provided suggested exercises. The exercises will not be collected. However, material covered in or based on the suggested exercises will likely –1–

appear on examinations. Students who work through the suggested exercises almost always outperform students who do not. Integrity/class participation: This category is subjective and will be evaluated at the instructor’s discretion. Attendance and class participation are encouraged. Repeated absences from class, failure to actively and regularly participate, or disruptive behavior will result in lower or no credit in this category. Plagiarism or other forms of academic dishonesty will not be tolerated and may result in no credit being awarded for integrity/class participation. Midterm and final examination: The examinations will cover all assigned readings, lectures, and suggested exercises up to the date of the examination. Notice that under the grading criteria given above, taking the midterm examination can never hurt a student’s final grade in the course. University rules dictate that the date, time, and location of the final examination cannot be changed. No early or late examinations will be permitted. Grading criteria: The instructor will apply the following grades, with pluses and minuses awarded only for borderline grades: A: Excellent. Student performance is outstanding. Student demonstrates a mastery of the material. Student exhibits a commitment to expanding ideas, vocabulary, and performance. Student’s attendance, participation, and class involvement are excellent. B: Good. Student performs beyond requirements of assignments. Student demonstrates an thorough understanding of the material. Student exhibits above-average interest in expanding ideas, vocabulary, and performance. Student’s attendance, participation, and class involvement are above average. C: Satisfactory. Student performance is average and all requirements are fulfilled. Student demonstrates an adequate understanding of the material. Student exhibits interest in expanding ideas, vocabulary, and performance. Student’s attendance, participation, and class involvement are adequate. D: Inferior. Student performance is uneven and/or requirements are partially fulfilled. Student does not demonstrate understanding of material or demonstrates little understanding of the material. Student exhibits minimal interest in expanding ideas, vocabulary, and performance. Student’s attendance, participation, and class involvement are less than adequate. F: Failure. No credit earned. Student fails to meet a minimum level of understanding or performance. Student’s attendance, participation, and class involvement are inadequate.

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CLASS SCHEDULE Week of 27-Sep

Topics and Associated Reading Introduction to the course Review of economics principles • O’Sullivan, Chapter 1 and Appendix: Tools of Microeconomics. • Hazlitt, Chapters 1 and 2. Why do cities exist? • O’Sullivan, Chapter 2. • D. Clement, “Urban legends,” The Region, pp. 10–13, 54–59, September 2004. • J. M. Quigley, “Urban diversity and economic growth,” Journal of Economic Perspectives, vol. 12, pp. 127–138, Spring 1998.

4-Oct

Why do firms cluster? • O’Sullivan, Chapter 3. • R. Florida, “The rise of the creative class,” Washington Monthly, May 2002. • E. L. Glaeser, “Review of Richard Florida’s The Rise of the Creative Class,” Regional Science and Urban Economics, vol. 35, pp. 593–596, 2005. • City of Portland, Economic Development Strategy: A Five-Year Plan for Promoting Job Creation and Economic Growth, July 2009. • Portland Development Commission, Economic Development Strategy for the City of Portland: Summary Report of the Blue Ribbon Committee, October 2002.

11-Oct

Urban growth and development policies • O’Sullivan, Chapter 5. • Hazlitt, Chapters 11 and 14. • M. O’Mara, “Don’t try this at home: You can’t build a new Silicon Valley just anywhere,” Foreign Policy, September/October 2010. • T. F. Buss, “The case against targeted industry strategies,” Economic Development Quarterly, vol. 13, pp. 339–356, November 1999. • W. Wiewel, “Policy research in an imperfect world: Response to Terry F. Buss, ‘The case against targeted industry strategies’,” Economic Development Quarterly, vol. 13, pp. 357–360, November 1999. • J. A. Finkle, “The case against targeting might have been more … targeted,” Economic Development Quarterly, vol. 13, pp. 361–364, November 1999. • T. F. Buss, “To target or not to target, that’s the question: A response to Wiewel and Finkle,” Economic Development Quarterly, vol. 13, pp. 365–370, November 1999.

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18-Oct

Urban land rent and land valuation • O’Sullivan, Chapter 6. • B. Wilson and J. Frew, “Apartment rents and locations in Portland, Oregon: 1992–2002,” Journal of Real Estate Research, vol. 29, no. 2, pp. 201–217, 2007. • M. Lutzenhiser and N. R. Netusil, “The effect of open spaces on a home’s sale price,” Contemporary Economic Policy, vol. 19, pp. 291–298, July 2001. • E. Fruits, Natural Gas Pipelines and Residential Property Values: Evidence from Clackamas and Washington Counties. February 2008. Guest Lecturer Professor Gerry Mildner on Thursday, October 20

25-Oct

MIDTERM EXAMINATION ON TUESDAY, OCTOBER 25 Review of midterm on Thursday, October 27

1-Nov

Land use patterns • O’Sullivan, Chapter 7. • J. Kotkin, “Urban legends: Why suburbs, not cities, are the answer,” Foreign Policy, September/October 2010. • C. Jaret, R. Ghadge, L. W. Reid, and R. M. Adelman, “The measurement of suburban sprawl: An evaluation,” City & Community, vol. 8, no. 1, pp. 65–84, 2009. • R. Ewing, R. Pendall, and D. Chen, Measuring Sprawl and Its Impact. Smart Growth America, 2002. Zoning and growth controls • O’Sullivan, Chapter 9. • W. A. Fischel, “An economic history of zoning and a cure for its exclusionary effects,” Urban Studies, vol. 41, pp. 317–340, February 2004. • M. Lewyn, “New urbanist zoning for dummies,” Alabama Law Review, vol. 58, pp. 257– 296, Spring 2007. • A. C. Nelson and T. Moore, “Assessing urban growth management: The case of Portland, Oregon, the USA’s largest urban growth boundary,” Land Use Policy, vol. 10, pp. 293–302, October 1993.

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8-Nov

Transportation: Automobiles • O’Sullivan, Chapter 10. • J. Leape, “The London congestion charge,” Journal of Economic Perspectives, vol. 20, pp. 157–176, Fall 2006. • M. Lewyn and S. Cralle, “Planners gone wild: The overregulation of parking,” William Mitchell Law Review, vol. 33, no. 2, pp. 613–626, 2007. • R. J. Pozdena, Driving the Economy: Automotive Travel, Economic Growth, and the Risks of Global Warming Regulations. Cascade Policy Institute, November 2009. • K. M. O’Regan and J. M. Quigley, “Cars for the poor,” Access, Spring 1998. • S. Sarkar, Pilot study initiative to explore the transportation needs of the low-income population in the Portland tri-county area. Cascade Policy Institute, September 2007. • P. Selinger, TriMet Comments on “Wheels to wealth.” TriMet, August 31, 2007. • S. Sarkar and J. Charles, Response to TriMet comments on Cascade’s pilot project proposal. Cascade Policy Institute, September 10, 2007. Transportation: Mass transit • O’Sullivan, Chapter 11. • A. D. Witte, C. Macharis, P. Lannoy, C. Polain, T. Steenberghen, and S. V. de Walle, “The impact of ‘free’ public transport: The case of Brussels,” Transportation Research Part A: Policy and Practice, vol. 40, pp. 671–689, October 2006. • R. D. Eckert and G. W. Hilton, “The jitneys,” Journal of Law and Economics, vol. 15, pp. 293–325, October 1972. • D. H. Pickrell, “A desire named streetcar: Fantasy and fact in rail transit planning,” Journal of the American Planning Association, vol. 58, pp. 158–176, Spring 1992.

15-Nov

Crime • O’Sullivan, Chapter 11. • S. D. Levitt, “Understanding why crime fell in the 1990s: Four factors that explain the decline and six that do not,” Journal of Economic Perspectives, vol. 18, pp. 163–190, Winter 2004. • E. Fruits, “Payday lending and crime: Evidence from Oregon,” June 2010. Working Paper. Housing policy • O’Sullivan, Chapter 14. • E. L. Glaeser and J. Gyourko, “The impact of building restrictions on housing affordability,” Federal Reserve Bank of New York Economic Policy Review, pp. 21–39, June 2003. • R. J. Pozdena, Smart Growth and Its Effects on Housing Markets: The New Segregation. National Center for Public Policy Research, Center for Environmental Justice, November 2002. • Campbell, J. Y., Giglio, S., and Pathak, P. (2011). Forced sales and house prices. American Economic Review, 101:2108–2131.

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22-Nov

Local government: Its finances and policies • O’Sullivan, Chapters 15 and 16. • Hazlitt, Chapters 4 and 5. • M. E. Kahn, “Climatopolis: How will climate change impact urbanites and their cities?” September 2010. http://www.voxeu.org/index.php?q=node/5495. NO CLASS MEETING ON THURSDAY, NOVEMBER 24

29-Nov

K-12 education • Neal, D. (2002). How vouchers could change the market for education. Journal of Economic Perspectives, 16(4):25–44. • Friedman, M. (1955). The role of government in education. In Solo, R. A., editor, Economics and the Public Interest. Rutgers University Press. • Hanushek, E. A. (2003). The failure of input-based schooling policies. Economic Journal, 113(485):F64–F98. Post-secondary education • Florida, R. and Cohen, W. M. (1999). Engine or infrastructure? The university role in economic development. In Branscomb, L. M., Kodama, F., and Florida, R., editors, Industrializing Knowledge: University Linkages in Japan and the United States. MIT Press. • Acs, Z. J., Glaeser, E. L., Litan, R. E., Fleming, L., Goetz, S. J., Kerr, W. R., Klepper, S., Rosenthal, S. S., Sorenson, O., and Strange, W. C. (2008). Entrepreneurship and urban success: Toward a policy consensus. Ewing Marion Kauffman Foundation.

6-Dec

Final examination Tuesday, December 6, 3:30 – 5:20 pm, regular classroom Date, time, and location of exam cannot be changed Consult http://www.pdx.edu/registration/final-exams-schedule to verify date and time of exam

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