Abstract: A key reason for the existence of cities are the externalities created when people cluster together in close proximity. During Covid, such interactions became with health risks and people found other ways to interact. We document how cities changed during Covid and consider how the persistence of these new ways of interacting, particularly remote work, will shape the development of cities in the future. We first summarize evidence showing how residential and commercial prices and activity adjusted at different distances from dense city centers during and since the pandemic. We use a textbook monocentric city model to demonstrate that two adjustments associated with remote work – reduced commuting times and increased housing demand – generate the patterns observed in the data. We then consider how these effects might be magnified by changes in urban amenities and agglomeration forces, and what such forces might mean for the future of cities.
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