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Urban Agglomeration Effects in India: Evidence from Town-Level Data

Author

Listed:
  • Rana Hasan

    (Economic Research and Regional Cooperation Department, Asian Development Bank)

  • Yi Jiang

    (Economic Research and Regional Cooperation Department, Asian Development Bank)

  • Radine Michelle Rafols

    (Asian Development Bank)

Abstract

Combining multiple data sets for India, we estimate the elasticity of wages with respect to town population and density between 1% and 2%, which is smaller than estimates in the literature based on district-level analysis. We also find that the employment share of firms with 10 or more workers—which typically describes firms that operate in the formal sector—is positively associated with city population and negatively associated with city density. Town characteristics such as infrastructure availability, geographic location, educational services, and industrial structure also play a role in explaining city productivity and the presence of relatively large firms. Overall, we interpret our results to suggest that there is scope to realize more fully urbanization's potential by addressing issues related to urban planning, infrastructure, and public service delivery, as has been emphasized previously by observers of Indian urbanization.

Suggested Citation

  • Rana Hasan & Yi Jiang & Radine Michelle Rafols, 2017. "Urban Agglomeration Effects in India: Evidence from Town-Level Data," Asian Development Review, MIT Press, vol. 34(2), pages 201-228, September.
    • Handle: RePEc:tpr:adbadr:v:34:y:2017:i:2:p:201-228
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    References listed on IDEAS

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    1. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India’s Manufacturing Sector Moving Away From Cities?," Harvard Business School Working Papers 12-090, Harvard Business School.
    2. J. Vernon Henderson, 2010. "Cities And Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 515-540, February.
    3. Gilles Duranton, 2015. "Growing through Cities in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(1), pages 39-73.
    4. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    5. Gilles Duranton & J. V. Henderson & William C. Strange (ed.), 2015. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 5, number 5.
    6. Rana Hasan & Nidhi Kapoor & Aashish Mehta & Asha Sundaram, 2017. "Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector," Asian Economic Policy Review, Japan Center for Economic Research, vol. 12(1), pages 70-90, January.
    7. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
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    Citations

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    Cited by:

    1. Grover, Arti & Lall, Somik & Timmis, Jonathan, 2023. "Agglomeration economies in developing countries: A meta-analysis," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    2. Grover,Arti Goswami & Lall,Somik V. & Timmis,Jonathan David, 2021. "Agglomeration Economies in Developing Countries : A Meta-Analysis," Policy Research Working Paper Series 9730, The World Bank.
    3. Subash Sasidharan & Shandre Thangavelu, 2023. "Industry Agglomeration, Urban Amenities, and Regional Development in India," Working Papers DP-2023-14, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Dhamija, Gaurav & Roychowdhury, Punarjit & Shankar, Binay, 2023. "Urbanization and Women Empowerment: Evidence from India," GLO Discussion Paper Series 1323, Global Labor Organization (GLO).

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    More about this item

    Keywords

    agglomeration; formal sector; Indian city;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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