Does culture affect local productivity and urban amenities?

• This paper asks whether cultural cities are more attractive for people and firms.
• I compute a measure of cultural specialization based on detailed occupational data.
• Estimate hedonic wage and rent equations
• Correct for endogeneity using an external instrument
• The impact of culture on city attractiveness is negligible.

Does a better cultural milieu make a city more livable for residents and improve its business environment for firms? I compute a measure of cultural specialization for 346 U.S. metropolitan areas and ask if differences in cultural environment across cities capitalize into housing price and wage differentials. Simple correlations replicate standard results from the literature: cities that are more specialized in cultural occupations enjoy higher factor prices. Estimations using time-series data, controlling for city characteristics and correcting for endogeneity weaken the magnitude of this effect. Even though the arts and culture might be appealing to some people and firms, such determinants are not strong enough to affect factor prices at the city level.