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Some Evidence on the Nature of Urbanization Economies

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  • Krupka, Douglas J.

    (University of Michigan)

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4573.

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Length: 24 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4573

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Keywords: agglomeration; urbanization economies; congestion; regional equilibrium; natural advantage; economic geography;

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  1. Krupka, Douglas J., 2008. "On Amenities, Natural Advantage and Agglomeration," IZA Discussion Papers 3598, Institute for the Study of Labor (IZA).
  2. Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
  3. Rappaport, Jordan, 2008. "Consumption amenities and city population density," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 533-552, November.
  4. Rappaport, Jordan, 2008. "A productivity model of city crowdedness," Journal of Urban Economics, Elsevier, vol. 63(2), pages 715-722, March.
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