Determinacy in Urban Form: Fixed Investment & Path Dependence in Urban Areas

Currently the economics of agglomeration receives a great deal of research atten-tion, focusing on a variety of externalities to explain the evolution of cities. Muchof this research is ahistorical, with little attention paid to the cumulative history ofinvestment decisions that are manifested in the urban form that researchers seek tounderstand. This paper presents evidence that the spatial distribution of employmentwithin the Los Angeles metropolitan area remains broadly unchanged during a re-markably dynamic period in terms of the growth and transformation of its populationand employment, as well as other of the fundamental variables of urban models suchas transportation and communication costs. Over the twenty-year sample period, thenumber of employment centers and their share of total employment is quite stable, asis the rank of employment density on a tract-by-tract basis. This stability appears tohave its origins in the large ¯xed investment in structures and highways made decadesearlier. Where employment concentrations are not situated astride one of the arteriesin the current highway network (largely established by 1960), their location can beattributed to the freeway system as it stood prior to WWII. Indeed, the spatial distri-bution of current employment centers appears to be explained in no small part by apath dependence that links these centers within the metropolitan area to their distinctantecedents at the turn of the last century