Urban Economics Economics generally studies how markets work A market consists of a collection of buyers and sellers exchanging goods and services Urban economics adds the effect physical geography has on the workings of markets

Urban Economics How does physical proximity – between participants in a transaction or in relation to the good transacted – affect markets? Examples: What determines variation in housing values across an urban area? Why are wages higher in areas that are more densely populated?

Urban Economics Urbanization is broadly defined as the concentration of people within an specific area Roughly 220 million in the US (out of a total population of 300 million) live in urbanized areas. These areas account for just 4% of the US land area Urbanization decreases the cost of making market transactions Industrialization in the 18 th and 19 th century allowed many goods/services that were produced in the home to be acquired through market transactions

Growth in industrialization related to urbanization In 1839: 72% of US output agricultural 17% manufacturing 11% of US pop. lived in urban areas In 1899: 33% of US output agricultural 53% manufacturing 40% of US pop. lived in urban areas

Urban Area Urban areas are defined by the US Census and change over time Metropolitan area is the standard term for a urbanized area A metropolitan statistical area consists of: A.at least one densely populated core area of at least 50,000 people and B.adjacent communities that are economically integrated with the core

Metropolitan Statistical Area Metropolitan statistical areas are made up of counties They include the county with the urban core as well as outlying counties Outlying counties are included in a metropolitan area if A.at least 25% of its workers commute to the central county containing the urban core B.At least 25% of the jobs in the outlying county are filled by workers living in the central county

Metropolitan Statistical Area Metropolitan areas typically named after the principal cities that make up the area Southern California includes the metropolitan areas: 2010 population Los Angeles-Long Beach-Santa Ana (Los Angeles and Orange County) 12,828,837 Riverside-San Bernardino-Ontario (San Bernardino and Riverside County) 4,224,851 San Diego-Carlsbad-San Marcos (San Diego County) 3,095,313

Trends in Urbanization 1.Over the years people have moved from less dense rural areas to urban areas Rank counties from most to least dense

Trends in Urbanization 2.People have migrated from the middle part of the United States toward the coasts mapmap Reasons include: Changing demand for temperate weather People no longer tied to manufacturing and agriculture that took place in the midwest

Trends in Urbanization 3.While people move to metropolitan areas, the areas themselves have become less dense