DRAFT PA 5042: Urban and Regional Economics (Spring, 2 credits)
PREREQUISITE: microeconomics or an equivalent course
Instructor
Jason Cao, 295G Humphrey School, cao@umn.edu, 612-625-5671.
Office hour: 1:00 – 2:00 pm Monday and by appointment
Besides my office hour, the best way to reach me is by email. Start with PA5042 and severalword summary of your questions in the subject. I may copy individual questions to all students in
the class if they are common questions.
Teaching Assistants
Lab section: 11:15 am – 12:05 pm, HHH 30
Office hours: 2:30 – 3:30 pm Tuesday (cube space in HHH 295)
Objectives
This course uses the principles of microeconomics to analyze urban/regional economic issues
and problems. By the end of the course, students should be able to:
 Provide an economics-based explanation for why cities exist and what causes them to
grow and shrink;
 Evaluate the importance of major economic forces in the development of cities;
 Conduct economic analysis of an urban area and its land markets;
 Use economic tools to analyze planning issues in different areas (land use, transportation,
housing and environment) and to illustrate and address their impacts on the economy,
social equity and environmental quality.
Readings
Arthur O’Sullivan, Urban Economics, 8th edition, New York: McGraw-Hill/Irwin, 2011.
(also on reserve in Wilson Library)
Additional readings are noted on the syllabus and available on the Moodle site.
Other Course Resources
Economic Lowdown Podcast Series, a decent “refresher” on some core economic concepts:
http://www.stlouisfed.org/education_resources/economic-lowdown-podcast-series/
Simpsonomics, the illustration of economic concepts in “The Simpsons” television show:
http://www.academia.edu/3668882/Simpsonomics_Teaching_Economics_Using_Episodes_of_T
he_Simpsons
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Course Requirements and Grading
The lectures will cover only the key concepts presented in the readings. Completing the readings
before lectures is essential to maximize your learning. Attendance at lab sessions is mandatory.
You will find it helpful, I promise. Feel free to discuss homework problems with your peers.
However, you are expected to finish your assignments individually.
This class is demanding. It covers a lot of material at a pace that students describe as “relentless” or (more
positively) “high energy.” It requires considerable outside-of-class time. UM policy states that for each
credit hour of a class, undergraduates are expected to work three hours – counting class time and study
time – to achieve an average grade. If we apply that policy to this graduate-level class, that means a work
load of 12 hours per week for this class, implying at least 8 hours per week outside of class. Count on it.
(see http://policy.umn.edu/education/studentwork)
Grades will be based on the following:
Homework assignments
7 x 10%
Final exam
30%
The homework is a deliberately sizable portion of your grade, as (1) it is in your best interests to do
it and keep up, and (2) it helps take some of the stress off the exam, and can help bring up your
final grade if you have difficulty with the time pressure of exams. All homework assignments, in
hard copies, are due in class on the following Thursdays. The penalty for each day of delay (1
minute to 24 hours) is worth 20% of the assignment grade.
If you wish to dispute the grade of an assignment, you must do so IN WRITING within one
week after the assignment has been returned. You must include a specific rationale for why your
assignment deserves a higher grade. If you have any concern regarding the scheduling of the
exam, come to me before the exam. No excuse will be accepted after the exam. A doctor’s note
is required for make-up of the exam.
Course Policies
Academic dishonesty: Students are expected to do their own assigned work. If it is
determined that a student has engaged in any form of Academic Dishonesty, he or she may be
given an "F" or an "N" for the course, and may face additional sanctions from the University.
Academic dishonesty in any portion of the academic work for a course shall be grounds for
awarding a grade of F or N for the entire course. See
http://regents.umn.edu/sites/regents.umn.edu/files/policies/Student_Conduct_Code.pdf
Diversity and collegiality: This course draws graduate students from a variety of disciplines.
This diversity of academic experience, assumptions regarding learning, and ways of
approaching problems is one of the most enriching aspects of the course. In addition, every
class is influenced by the fact that students come from widely diverse ethnic and cultural
backgrounds and hold different values. Because a key to optimal learning and successful
teaching is to hear, analyze, and draw from a diversity of views, the instructors expect
collegial and respectful dialogue across disciplinary, cultural, and personal boundaries.
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Student conduct: Instructors are responsible for maintaining order and a positive learning
environment in the classroom. Students whose behavior is disruptive either to the instructor or
to other students will be asked to leave. Students whose behavior suggests the need for
counseling or other assistance may be referred to their college office or University
Counseling and Consulting Services. Students whose behavior may violate the University
Student Conduct Code may be referred to the Office of Student Judicial Affairs.
Sexual harassment: University policy prohibits sexual harassment as defined in the
University Policy Statement (https://policy.umn.edu/hr/sexualharassment) revised on January
2014.
Accommodations for students with disabilities: Participants with special needs are strongly
encouraged to talk to the instructors by the second Thursday to gain maximum access to
course information. All discussions will remain confidential. University policy is to provide,
on a flexible and individualized basis, reasonable accommodations to students who have
documented disability conditions (e.g., physical, learning, psychiatric, vision, hearing, or
systemic) that may affect their ability to participate in course activities or to meet course
requirements. Students with disabilities are encouraged to contact Disability Services and
their instructors to discuss their individual needs for accommodations.
Student mental health: As a student you may experience a range of issues that can cause
barriers to learning, such as strained relationships, increased anxiety, alcohol/drug problems,
feeling down, difficulty concentrating and/or lack of motivation. These mental health
concerns or stressful events may lead to diminished academic performance or reduce a
student's ability to participate in daily activities. University of Minnesota services are
available to assist you with addressing these and other concerns you may be experiencing.
You can learn more about the broad range of confidential mental health services available on
campus via http://www.mentalhealth.umn.edu/
Schedule
Week 1:
Introduction
Tue (1/20) & Thur (1/22)
Ch1: Introduction and axioms of urban economics
Appendix: Tools of microeconomics (pp. 455-477)
Parchomovsky, Gideon and Peter Siegelman. 2012. “Cities,
Property, and Positive Externalities.” William and Mary Law
Review 54(1): 211-261.
Week 2:
City Development
Tuesday (1/27):
Ch2: Why do cities exist?
Thursday (1/29):
Ch3: Why do firms cluster?
Puga, Diego. 2010. “The Magnitude and Causes of Agglomeration
Economies.” Journal of Regional Science 50(1): 203-219.
(Recommended)
Ch4: City size, pp. 70-75
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Week 3:
City Development and Land Rent
Tuesday (2/3):
Ch5: Urban growth
Thursday (2/5):
Ch6: Urban land rent
Week 4:
Land Use
Tuesday (2/10):
Thursday (2/12):
Ch8: Neighborhood choice
Ch9: Zoning and growth controls
Rothwell, Jonathan and Douglas S. Massey. 2009. “The Effect of
Density Zoning on Racial Segregation in U.S. Urban Areas.”
Urban Affairs Review 44(6): 779-806. (Recommended)
Week 5:
Transportation
Tuesday (2/17):
Ch10: Autos and highways
Wang, Tingting and Cynthia Chen. 2014. “Impact of Fuel Price on
Vehicle Miles Traveled (VMT): Do the Poor Respond in the Same
Way as the Rich?” Transportation 41:91-105.
Thursday (2/19):
Ch11: Urban transit
Higgins, Christopher, Mark R. Ferguson, and Pavlos S.
Kanaroglou. 2014. “Light Rail and Land Use Change: Rail
Transit’s Role in Reshaping and Revitalizing Cities.” Journal of
Public Transportation 17(2): 93-112.
Week 6:
Housing
Tuesday (2/24):
Thursday (2/26):
Ch14: Why is housing different? (guest lecturer)
Ch15: Housing policy
Ventry, Dennis J. 2014. “Misinformed and Misled About the
Benefits of the Mortgage Interest Deduction.” Cityscape 16(1):
219-232. (Recommended)
Weicher, John C. 2014. “The Efficiency and Equity of the Home
Mortgage Interest Deduction.” Cityscape 16(1): 207-210.
(Recommended)
Week 7:
Local Government
Tuesday (3/3):
Ch17: Local Government Revenue
Thursday (3/5):
Final exam
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