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Urban revolution? – A mayor's influence on a city's economy

The cities of New York and Copenhagen are both facing significant political realignments in their city halls. What might this mean for their economies?

By CBS Executive Education

The newly elected mayor of New York City, Zohran Mamdani, has set an ambitious agenda for the city that never sleeps. With plans to freeze rent in parts of the housing market, provide free public transportation on buses, offer free childcare, and introduce pilot programs with publicly owned grocery stores, Mamdani is working with some core parts of the economic machinery of a city with an economy the size of Canada.

Mamdani’s initiatives could have a significant impact on the city’s economy. His argument for the programs is that they are aimed at helping the city's residents deal with rising living costs.

Copenhageners have faced similar economic challenges, which politicians did not hesitate to use as key parts of their campaigns in the lead-up to the municipal elections in November. One promise after another has been made to ease the daily lives of citizens. The voters have now decided to give the mayoral candidate from the Socialist People’s Party, Sisse Marie Welling, the chance to put her stamp on the city after more than a hundred years with a social democrat as the mayor.

But what do mayoral initiatives mean for a city's overall economy, and can plans on the scale that Mamdani envisions for New York City be considered feasible?

The economics of urban development

We spoke with Ismir Mulalic, Associate Professor at Copenhagen Business School, about his perspective on some of Mamdani’s proposed projects. Mulalic does research within the field of urban economics, which looks at the economic forces that shape cities, including land use, transportation, commuting, public services, and local housing and labor markets. His research covers everything from parking opportunities in Copenhagen, to immigrant cycling culture in the Netherlands, to the impact of the Great Belt Bridge on productivity and wages.

Mulalic sees the transportation aspects of Mamdani’s political agenda as realistically achievable:

“Of course, it depends on support and legislative backing from the state of New York. But some of his ideas have precedents in other cities, such as Tallinn, Luxembourg, and Boston in the U.S. The latter has subsidized several bus routes on a larger scale in the 2020s under Mayor Michelle Wu. Mamdani was strategic in focusing his campaign promise on buses, which can be subsidized more easily than the subway, which far more New Yorkers rely on for their daily commute.”

“There are always many promises made during an election campaign, but ultimately, there needs to be a sustainable development model that can last in the long term and doesn’t risk having the opposite effect of what is intended. For instance, fewer parking spaces in a city center might end up creating more pollution rather than less, because drivers end up keeping their engines running longer while they search for a place to park."

Ismir Mulalic, Associate Professor at CBS

US mayors wield great power

Mulalic believes that Mamdani has a good chance of at least attempting to implement his policies:

“In the U.S., local leaders have more autonomy than their Danish counterparts to push through changes, such as supporting public transportation or implementing rent control. As mayor, one can introduce quite comprehensive programs that can impact the city’s development.”

Mulalic outlines the pros and cons of Mamdani's proposals in the following ways:

“Economically, Mamdani's proposals could improve the mobility for low-income groups and thereby reduce inequality in the city. However, there is also the risk of distorting the market, as subsidies could lead to overconsumption or put pressure on public resources.”

Mulalic also points out the size of New York City and the complexity of making large-scale economic changes in a city of this size:

"It will be crucial for Mamdani and his administration to take a balanced approach, allowing big projects time to succeed in a sustainable way. In general, it’s hard to predict how initiatives of this magnitude will affect such a large economic system as New York City over time. It requires time and patience - especially patience, which is something both politicians and voters seem to have less of today.”

Voting with your feet

Zohran Mamdani won the mayoral election with about 50.4% of the vote, while his opponent Andrew Cuomo garnered 41.6% of the vote and Republican candidate Curtis Sliwa received 7.1% of the vote. Mamdani’s campaign promises have not only divided the city's residents but also his own party, the Democrats. Some see his policies as Marxist and economically unsustainable, fearing that higher taxes and regulation could drive businesses away. The same concerns apply to the citizens themselves.

“There’s a phenomenon called ‘voting with your feet,’” Mulalic says.

“That’s when politicians create an urban environment that caters to certain voter groups, which then causes other residents to leave. For example, younger people and retirees often have very different interests when it comes to city spaces, and catering to one group to a greater degree can push the other group to move.”

In a survey conducted just before the mayoral election in New York City, the equivalent of nearly a million residents said they would leave the city if Mamdani won. President Donald Trump has welcomed these dissatisfied New Yorkers to his new home state of Florida, even threatening to withhold federal funds from the city. While Mulalic finds it unlikely that one in ten New Yorkers would leave the city, migration can generally be seen as a reaction to one city becoming more attractive to live in than another.

Copenhagen swings further left

In Copenhagen, the new and more left-leaning mayor, Sisse Marie Welling from the People’s Socialist Party, has won the top post as mayor. The more left-leaning mayor has been chosen by a broad coalition of parties, but Copenhagen could still see a political agenda that focuses even more on a green transition and increased public welfare. This could mean more attention paid to sustainable urban development projects and more support for public transportation – mirroring Mamdani’s vision for New York.

“There are always many promises made during an election campaign, but ultimately, there needs to be a sustainable development model that can last in the long term and doesn’t risk having the opposite effect of what is intended. For instance, fewer parking spaces in a city center might end up creating more pollution rather than less, because drivers end up keeping their engines running longer while they search for a place to park,” Mulalic says.

For the city’s businesses, a political shift at the city hall could mean increased demand for sustainability and social responsibility, but it could also open up for new opportunities within green technology and innovation. Politicians’ ability to balance between making life easier for citizens while considering the long-term impacts of their policies will be crucial to both cities’ future economic success.

Ismir Mulalic primarily conducts research in transport and urban economics.

He is an Associate Professor at the Department of Economics at CBS.

He has previously worked at the Technical University of Denmark and at Kraks Foundation – Institute for Urban Economics.

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