Automobiles and urban density

Abstract

How has the rise of the automobile influenced urban areas over the past century? In this paper, we investigate the long-run impact of car ownership on urban population density, based on a sample of 232 city observations in 57 countries. Using the presence of a domestic car manufacturer in 1920 as a source of exogenous variation, our IV estimates indicate that car ownership substantially reduces density. A one standard deviation increase in car ownership rates causes a reduction in population density of around 35%. For employment density, we find almost identical results. This result has important implications for vehicle taxation, car ownership growth in developing countries, and new transport technologies such as automated vehicles.