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Cities, skills, and regional change

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One approach to urban areas emphasizes the existence of certain immutable relationships, such as Zipf's or Gibrat's Law. An alternative view is that urban change reflects individual responses to changing tastes or technologies. This paper examines almost 200 years of regional change in the U.S. and finds that few, if any, growth relationships remain constant, including Gibrat's Law. Education does a reasonable job of explaining urban resilience in recent decades, but does not seem to predict county growth a century ago. After reviewing this evidence, we present and estimate a simple model of regional change, where education increases the level of entrepreneurship. Human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1255.

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Date of creation: Jun 2010
Date of revision: Mar 2011
Handle: RePEc:upf:upfgen:1255

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  1. Edward L. Glaeser & Joseph Gyourko, . "Urban Decline and Durable Housing," Zell/Lurie Center Working Papers 382, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  2. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2006. "Urban growth and housing supply," Journal of Economic Geography, Oxford University Press, vol. 6(1), pages 71-89, January.
  3. Jonathan Eaton & Zvi Eckstein, 1994. "Cities and Growth: Theory and Evidence from France and Japan," NBER Working Papers 4612, National Bureau of Economic Research, Inc.
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  5. Edward Glaeser & William Kerr & Giacomo Ponzetto, 2009. "Clusters of Entrepreneurship," Working Papers 09-36, Center for Economic Studies, U.S. Census Bureau.
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  7. Esteban Rossi-Hansberg & Mark L.J. Wright, 2005. "Urban Structure and Growth," NBER Working Papers 11262, National Bureau of Economic Research, Inc.
  8. Jaimovich, Nir & Floetotto, Max, 2008. "Firm dynamics, markup variations, and the business cycle," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1238-1252, October.
  9. Steckel, Richard H., 1978. "The Economics of U.S. Slave and Southern White Fertility," The Journal of Economic History, Cambridge University Press, vol. 38(01), pages 289-291, March.
  10. Edward L. Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
  11. Klaus Desmet & Esteban Rossi-Hansberg, 2007. "Spatial Growth and Industry Age," NBER Working Papers 13302, National Bureau of Economic Research, Inc.
  12. Thomas J. Holmes, 1998. "The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 667-705, August.
  13. Duranton, Gilles, 2006. "Some foundations for Zipf's law: Product proliferation and local spillovers," Regional Science and Urban Economics, Elsevier, vol. 36(4), pages 542-563, July.
  14. Sukkoo Kim & Robert A. Margo, 2003. "Historical Perspectives on U.S. Economic Geography," NBER Working Papers 9594, National Bureau of Economic Research, Inc.
  15. Xavier Gabaix & Yannis M. Ioannides, 2003. "The Evolution of City Size Distributions," Discussion Papers Series, Department of Economics, Tufts University 0310, Department of Economics, Tufts University.
  16. Jesse M. Shapiro, 2005. "Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital," NBER Working Papers 11615, National Bureau of Economic Research, Inc.
  17. Edward Glaeser & Janet Kohlhase, 2003. "Cities, regions and the decline of transport costs," Papers in Regional Science, Springer, vol. 83(1), pages 197-228, October.
  18. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
  19. Simon, Curtis J. & Nardinelli, Clark, 2002. "Human capital and the rise of American cities, 1900-1990," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 59-96, January.
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Cited by:
  1. Dario Diodato & Anet Weterings, 2012. "The Resilience of Dutch Regions to Economic Shocks. Measuring the relevance of interactions among firms and workers," Papers in Evolutionary Economic Geography (PEEG) 1215, Utrecht University, Section of Economic Geography, revised Aug 2012.
  2. Jaume Masip Tresserra, 2013. "Sub-centres and Urban Inequality: A study on Social Equity in the Barcelona Metropolitan Region," ERSA conference papers ersa13p64, European Regional Science Association.
  3. Giorgio Fazio & Marco Modica, 2012. "Pareto or log-normal? A recursive-truncation approach to the distribution of (all) cities," Working Papers 2012_10, Business School - Economics, University of Glasgow.
  4. Michaela Trax & Stephan Brunow & Jens Suedekum, 2012. "Cultural diversity and plant‐level productivity," Norface Discussion Paper Series 2012029, Norface Research Programme on Migration, Department of Economics, University College London.

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