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Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional inequality

Tom Kemeny () and Michael Storper

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: After a long period of convergence, around 1980, inter-place gaps in economic well-being in the United States began to increase. This rising inequality offers a rich terrain to explore causality in regional economics and development theory. This paper presents new, long-run evidence on interregional inequality that highlights the need to situate the current moment in a context of episodic alternations between convergence and divergence. In light of this evidence, the paper revisits the theoretical literature, finding gaps in existing supply- and demand-side models. A demand-led perspective can be strengthened by integrating a primary role for disruptive technological change. We posit a theory of alternating waves, where major technology shocks initially concentrate, and eventually deconcentrate, demand for skilled workers performing complementary tasks. Labor supply responds to these centripetal and centrifugal forces. These reversals yield the observed patterns of rising and falling interregional inequality. We trace out the implications of this theory in both academic and policy terms.

Keywords: cities; income; inequality; economic geography; regional development; convergence (search for similar items in EconPapers)
JEL-codes: N90 O33 R11 R12 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2020-02
New Economics Papers: this item is included in nep-geo, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
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