The Service Sector in Urban Revitalization

Sectoral Composition, Employment Density Gradients, and Central City Fiscal Capacity

by Aaron S. Gurwitz

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Part of a project on the role of the service sector in urban revitalization, this report presents initial estimates of the relationship between the sectoral (or industrial) composition of a metropolitan economy and two characteristics of that economy: the constant elasticity of employment density with distance from the central business district and the aggregate tax base of the central county. Significant sectoral composition effects on both dependent variables are estimated, but only the effects on the distance elasticity of employment density are quantitatively large. A model of employment location, fiscal capacity, and sectoral composition is developed, indicating that a better specification of these relationships would allow for variable coefficients and show that the fiscal capacity relationship is nonlinear in a specific way.

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