Abstract: This paper uses a novel dataset and the general equilibrium model in Desmet and Rossi-Hansberg (2013) to analyze the Spanish city size distribution, which is driven by three city-specific characteristics: productivity, amenities, and frictions. Counterfactual simulations show that removing cross-city variation in these characteristics leads to welfare gains and population shifts in Spain larger than those in the U.S. but smaller than in China. Moreover, policies targeting these city characteristics consistently outperform those based on population size. For example, capping the populations of the two largest cities, Madrid and Barcelona, reduces overall welfare.
Keywords: Systems of cities; optimal city size; amenities; quality of life; quantitative urban models; Spanish urban system; city growth
Cite as: David Cuberes, Enrique Moral-Benito, Javier Quintana, Urban accounting and welfare in Spain, Regional Science and Urban Economics, Volume 115, 2025, 104160, ISSN 0166-0462, https://doi.org/10.1016/j.regsciurbeco.2025.104160
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