Splitting up or dancing together? Local institutional structure and the performance of urban areas

Marco Di Cataldo, Licia Ferranna, Margherita Gerolimetto and Stefano Magrini

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

Abstract: This article analyzes institutional changes in local governance structures as determinants of wage premium and innovation capacity of urban areas. By combining individual and metropolitan area data for the US, we study the role of institutional fragmentation, related to the number of local governments operating in an area, and institutional coordination, stemming from the creation of authorities fostering the collaboration of local governments. Our findings suggest that more fragmented institutional landmarks do not benefit the wage competitiveness and innovativeness of urban areas. If anything, they harm them. Conversely, stronger coordination among local governments boosts the productivity of functional regions by increasing their wage premium and improving their capacity to innovate. Coordination agreements between different counties or municipalities are especially relevant in the case of urban areas modifying their functional borders over time. These findings provide key insights into the economic effects of reforming the governance structure of metropolitan areas.

Keywords: innovation; institutional coordination; institutional fragmentation; local governance; US MSAs; wage premium (search for similar items in EconPapers)
JEL-codes: H70 J30 R12 R23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2023-01-06
New Economics Papers: this item is included in nep-geo, nep-sbm and nep-ure
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Published in Economic Geography, 6, January, 2023, 99(1), pp. 81 - 110. ISSN: 0013-0095

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Related works:
Journal Article: Splitting Up or Dancing Together? Local Institutional Structure and the Performance of Urban Areas (2023)
Working Paper: Splitting up or dancing together? Local institutional structure and the performance of urban areas (2022)
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