Structural Change, Urban Congestion, and the End of Growth

Volker Grossmann

No 3626, CESifo Working Paper Series from CESifo

Abstract: This paper develops a two-sector R&D-based growth model with congestion effects from increasing urban population density. We show that endogenous technological progress causes structural change if there are positive productivity spillovers from the modern to the traditional sector and Engel’s law holds. In turn, urban congestion effects cause a productivity slowdown in the modern sector. Eventually, economic growth may cease in the long-run. We also show that land dilution from a higher workforce may give rise to negative scale effects on GDP per capita. Finally, we investigate how the optimal land allocation depends on the strength of urban congestion effects.

Keywords: congestion; endogenous growth; Engel's law; structural change; urbanization (search for similar items in EconPapers)
JEL-codes: O10 O30 O40 (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Structural Change, Urban Congestion, and the End of Growth (2013)
Working Paper: Structural Change, Urban Congestion, and the End of Growth (2011)
Working Paper: Structural Change, Urban Congestion, and the End of Growth (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3626

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