Agglomeration Economies Are Not Going Away

My research focuses on the drivers of urban revitalization, the distribution of amenities among neighborhoods of varying income levels and implications for well-being inequality, and factors driving the discrepancy in nutrition between wealthier and poorer households.

I believe that, in the long term, consumer agglomeration economies will continue to pull people to densely populated urban centers. The non-tradeable amenities that cities offer, including bars, restaurants, gyms, and other consumption amenities, will continue to attract young, college-educated people who have been so important to city revitalization. In the short term, the temporary closure of these consumption amenities will have a significant impact on the well-being of urban residents, but I don’t expect that to persist long term.

However, I’m concerned about both the short- and long-term effects of this crisis on households residing in food deserts (areas with limited access to stores selling nutritious food). The vast majority of lower-income households who rely on Supplemental Nutrition Assistance Program (SNAP) benefits must go to physical stores to redeem their SNAP benefits and, because many of these households do not have cars and do not live within walking distance of a grocery store, they must use public transportation to get there; as a result, these people are, in the short term, at higher risk of exposure to coronavirus. Scaling up pilot programs to permit the use of SNAP benefits for online grocery purchases would mitigate these disparities in exposure.

Finally, I am concerned about the long-term effects this crisis will have on the distribution of retail and the implications for low-income neighborhoods. I believe that this crisis will accelerate the redistribution of retail activity across locations and between online and offline stores: not all retail stores that have closed temporarily will re-open after the crisis, and those that do will likely be in higher-income neighborhoods. This will leave lower-income neighborhoods even more under-served by retail than they currently are.

Jessie Handbury is Assistant Professor of Real Estate, The Wharton School, and a Penn IUR Faculty Fellow.

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