urban dis-amenities in developing countries are similar for pollution and congestion. Our results point to an elasticity of pollution and congestion with respect to city density to be 45 percent and 16 percent respectively in developing countries (compared to 48 percent and 18 percent for developed countries).<sup>15</sup> By contrast, the elasticity of crime, measured by the homicide rate, with respect to city built-up density is significantly higher at +24 percent in developing countries compared with -56 percent in developed countries. The latter suggests that if crime is accounted for in measuring the advantages of locating agglomerations, the net benefits in developing countries would be much smaller.

As a robustness exercise we use city population density from census data (instead of build-up density) for each country.<sup>16</sup> . The results are presented in the Appendix Table A4. Although we find somewhat lower urban cost elasticities for pollution (18 percent overall) and higher for congestion (26 percent), the key messages do not change. We find that the levels of congestion, crime and pollution are larger in developing economies, but the urban cost elasticities are not discernibly different between developing and developed countries.

**_Table 7: Urban cost elasticities and cost levels - across developed and developing countries_**

|Outcome:|**Log PM2.5**|**Pollution**|**Log Hours L**<br>**Ti**|**ost to Travel**<br>**me**|**Log Hom**|**icide Rate**|
|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|
|Developing Country|0.150|0.252**|0.176***|0.264***|1.578***|1.686***|
||(0.097)|(0.118)|(0.060)|(0.073)|(0.212)|(0.201)|
|Log Population Density|0.453***|0.481***|0.158***|0.177***|0.006|-0.566**|
||(0.052)|(0.056)|(0.039)|(0.043)|(0.166)|(0.259)|
|Log Population Density *<br>||-0.145||-0.140||0.807**|
|Developing Country||(0.136)||(0.094)||(0.331)|
|Constant|2.525***|2.534***|4.627***|4.631***|0.428***|0.220*|
||(0.040)|(0.042)|(0.023)|(0.024)|(0.122)|(0.125)|
|Observations|298|298|337|337|188|188|

Note: City-level pollution reflects PM2.5 data for 2014 for 298 cities (78 in developing countries). Congestion reflects the annual additional hours spent driving in rush hours, measured in 2018, and contains data for 337 cities (69 in developing countries). Homicide rate data reflects 124 cities (63 in developing countries) in 2015. Population density reflects population per square km of built up area in 2015. The top and bottom 1 percent of population density observations are excluded. Non-HIC reflects a dummy variable for developing countries using World Bank country classifications in 2015. Log population density is demeaned such that the constant terms are interpreted at the mean city density. Robust standard errors in parentheses, ***, ** and * reflect significance at the 1, 5 and 10 percent levels respectively.

# 7. Conclusions

15 Our estimate is somewhat higher than Ahlfeldt and Pietrostefani (2019) who report the pollution elasticity to be +22 percent, using OLS estimation and OECD data. They also find a congestion elasticity of +8 percent, using a different measure of congestion to our paper, average travel speeds using OECD data. Their meta-analysis of 13 high income country studies of crime elasticities (not focusing on homicides as we do) finds a mean elasticity of -24 percent.

16 Census data is available for only about half the cities in our sample.

24