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The magnitude and causes of agglomeration economies

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  • Diego Puga

    ()
    (IMDEA Social Sciences, Universidad Carlos III de Madrid and, CEPR)

Abstract

Firms and workers are much more productive in large and dense urban environments. There is substantial evidence of such agglomeration economies based on three aproaches. First, on a clustering of production beyond what can be explained by chance or comparative advantage. Second, on spatial patterns in wages and rents. Third, on systematic variations in productivity with the urban environment. However, more needs to be learned about the causes of agglomeration economies. We have good models of agglomeration through sharing and matching, but not a deep enough understanding of learning in cities. Despite recent progress, more work is needed to distinguish empirically between alternative causes.

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Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2009-09.

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Date of creation: 21 Sep 2009
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Publication status: Published in Journal of Regional Science 50(1), February 2010: 203-219
Handle: RePEc:imd:wpaper:wp2009-09

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Keywords: agglomeration economies;

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