Hitotsubashi Trade/Urban Economics Workshop – Hans Koster (Vrije Universiteit Amsterdam

2025/10/14

October 14 (Tue) Hans Koster (Vrije Universiteit Amsterdam) 15:40–17:10, Place: IIR Laboratory II

Title: The persistence of urban decline: Evidence from France’s largest coal basin

Abstract: We argue that urban decline persists due to the interaction between sorting and the durability of the housing stock. Using the history of coal production in France’s largest mining basin as a negative economic shock to local employment, we examine its effect on urban decline. The basin’s geological boundaries and the proximity of housing to mines allow us to analyze local variations. We find that housing prices today drop by 11% when entering the basin, with 40% of this decline attributable to lower housing quality and the rest to sorting effects. A dynamic spatial equilibrium model with forward-looking developers suggests that urban decline can persist for many decades before reaching a new steady state, leading to increased welfare inequality between low-skilled and high-skilled households in the area.

This workshop is co-hosted with IDE-JETRO.