1. What are the economic advantages linked to city density?
Although the connection between population growth and economic development still is not well studied, generally, increased city density has a number of economic advantages. According to Ciccone and Hall, an increase of city density leads to increase of educational and employment density, and this, in turn, provides higher labor productivity (Ciccone, 68). The significant part of urban economists believes that “people tend to cluster together because they can work together more efficiently,” and “denser areas are in general more productive than sparsely populated ones” (Fee 1). Indeed, higher city density is connected with an increase of all factors in one or another way influencing on the economy: energy efficiency, mobility, technological progress, a range of markets and development of trade, levels and amount of talented educated people, increased rates of innovation, increased income, etc. People with better abilities and skills prefer to live in dense city areas. According to studies, there is a twenty-five percent correlation between the amount of population with college degrees and area density across the metropolitan areas in the United States (“Why Humanity Loves, and Needs, Cities”). Increased city density provides better and closer social communication; humans’ ability to learn from others leads to increased value of knowledge and makes dense areas innovational hubs with literally just an uncontrolled source of ideas. Increased density leads to expansion of cities, and technological progress and innovations lead to the creation of new high-value jobs, development of economic sectors, and provide opportunities for economic mobility. In the economic model based on Brueckner’s approach, the shorter is distance, the higher are population density, commuting costs and housing consumption (Author, 41). In other words, these three factors are in direct correlation with each other; increased density brings more money. All of that makes high-density cities just an endless resource for economic support and potential economic growth.
2. Rent control, rent subsidies and income subsidies are used to improve housing affordability. Which is the better approach, by listing the advantages and disadvantages of each.
Rent control as a way of improving housing affordability has a number of positive and negative outcomes. On the open market, in comparing with norms established by rent-control laws, prices grow quicker, and tenants who live in controlled areas save a significant amount of money and are protected from loss of their apartments because of very high prices as well as due to the fact that in controlled areas reasons of possible eviction are strictly limited. However, at the same time, rent-controlled apartments affect prices on apartments in market zones. There is always a price level that allows tenants and landlords to deal with each other, and in controlled areas it is lower. In order to equal it, landlords increase prices in non-controlled areas, and apartments there become more expensive than should be. Rent subsidies are financial benefits for people who receive income subsidies and have rental costs that need to be covered; they are also allowed for renters with low income. Income subsidies provide financial aid for people who have no other choice in supporting their families and themselves. In order to try to get rent and income subsidies, an applicant should meet a number of requirements, and only after that could give an application. Rent and income subsidies also have a number of advantages and disadvantages. They reduce poverty rates and crime rates in urban areas and give people an opportunity to move further, find new jobs and increase the level of their lives. However, subsidies are financed by taxes, and some experts think that money should be spent on significant for the whole population programs like education and healthcare (“What Is Section 8? – Low Income Housing Assistance”). Also, subsidies could cause such issues with accountability as loss of applications or delays of payments. In general, subsidies allow tenants rent apartments in areas they could not pay for without assistance and save money for personal necessities.
Rent control is the better approach, cause it equals prices for housing and allows people to save part of their money. Subsidies are harder to get, cause the applicant needs to meet specific requirements. They allow poor people to live full lives, but are financed by taxes, and the question of their actuality and using remains open.
References
Ciccone A., and Hall R.E. “Productivity and the Density of Economic Activity.” The American Economic Review, 86.1 (1996): 54-70. Retrieved from http://web.stanford.edu/~rehall/Productivity-AER-March-1996.pdf.
Colley, A. “What Is Section 8? – Low Income Housing Assistance.” Money Crashes. Retrieved from http://www.moneycrashers.com/what-is-section-8-housing/.
Glaeser, E.L. “Why Humanity Loves, and Needs, Cities.” New York Times. Retrieved from http://economix.blogs.nytimes.com/2010/04/13/why-humanity-loves-and-needs-cities/.
Fee, K., and Hartley, J. “Urban Growth and Decline: The Role of Population Density at the City Core.” Economic Commentary, 2011-27 (2011): 1-6. PDF.
