Recent research has stressed the role of consumer amenities for urban development. In this article, we investigate the impact of cultural heritage on the attractiveness of cities by analyzing the location choice of households. We develop and estimate a residential sorting model that allows us to compute the marginal willingness to pay for cultural heritage as well as other urban amenities. Since the attractiveness of residential locations may be affected by amenities of other nearby locations as well, we extend the model to incorporate these effects, using spatial econometric techniques. Our model accounts for unobserved amenities, heterogeneity of preferences among households and spatial correlation between observed and unobserved amenities. The results confirm that cultural heritage has a substantial impact on the attractiveness of cities.
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