ABSTRACT
In the past, cities were primarily seen as centres of production, while nowadays they are
increasingly perceived as centres of consumption (Glaeser et al., 2001; Rappaport, 2008).
Although nominal wages increase with the city size, the costs of living increase even more,
indicating that people are willing to give up real wages to enjoy the consumer amenities
that are typically found in large cities (Tabuchi & Yoshida, 2000). This trade-off holds
especially for the higher-educated part of the workforce (Lee, 2010; Dalmazzo & De
Blasio, 2011).1 Amenities, here, are not only the aesthetic properties of large cities such
as historical buildings and heritage sites (e.g. Van Duijn & Rouwendal, 2013), but also
the presence of a variety of specialized goods and services (e.g. Berry & Waldfogel,
2010; Burger et al., 2013) and the provision of specialized public services (e.g. Dahlberg
et al., 2012; Ebertz, 2013). Traditionally, universities, hospitals, stadiums, concert halls,
theatres, galleries, museums and higher-order retail functions are present in large cities,
while inhabitants of towns, villages and hamlets do not have ready local access to these
amenities. The presence of consumer amenities is also increasingly important in the
location decisions of firms and households, which is reflected in the higher growth rates
of amenity-rich places (Glaeser et al., 2001; Clark et al., 2002; Chen & Rosenthal,
2008; Markusen & Schrock, 2009) as well as in the recent increase in exchange commut-
ing in many Western societies,2 that is, people living in the amenity-rich central cities and
working in the suburban areas (Van der Laan, 1998; Aguilera, 2005; De Goei et al., 2010;
Burger et al., 2011).
