Some Evidence on the Nature of Urbanization Economies

Douglas Krupka

No 4573, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Urbanization economies – the effects on productivity and utility created endogenously by larger cities – are a fundamental component of both the economic geography of modern societies and the perpetuation of innovation and economic growth at a national level. Cities account for vast majorities of population – and even larger proportions of production and innovation – in all advanced economies. The nature of these endogenous effects of city size is thus of considerable importance. Krupka (2008) presents a general model in which exogenous variation in local productivity ("natural advantage") and development constraints generate covariation in local incomes, housing prices and population. In that model, the strength of the correlation amongst these variables depends on the nature of the dominant urbanization economy (or diseconomy). This paper looks at the data over the last several decades and finds that the data is consistent with city size increasing consumer/resident happiness and/or reducing productivity of employers.

Keywords: agglomeration; urbanization economies; congestion; regional equilibrium; natural advantage; economic geography (search for similar items in EconPapers)
JEL-codes: D5 J31 R12 R13 R23 R31 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009-11
New Economics Papers: this item is included in nep-geo and nep-ure
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