Three keys to the city: resources, agglomeration economies, and sorting
Metropolitan areas in the U.S. contain almost 80 percent of the nation’s population and nearly 85 percent of its jobs. This high degree of spatial concentration of people and jobs leads to congestion costs and higher housing costs. To offset these costs, workers must receive higher wages, and higher wages increase firms’ costs. So why do firms continue to produce in cities where the cost of doing business is so high? Economists offer three main explanations. First, cities developed and grew because of some natural advantage, such as a port. Second, as cities grew, the resulting concentration of people and jobs led to efficiency gains and cost savings for firms, creating agglomeration economies. Finally, the presence of a talented and flexible labor force made it feasible for entrepreneurs to start new businesses. This third reason for the growth of cities is called sorting. In “Three Keys to the City: Resources, Agglomeration Economies, and Sorting,” (351 KB, 13 pages) Jerry Carlino looks at recent developments in measuring each of the sources of city productivity and discusses the policy implications of this research
Volume (Year): (2011)
Issue (Month): Q3 ()
|Contact details of provider:|| Postal: 10 Independence Mall, Philadelphia, PA 19106-1574|
Web page: http://www.philadelphiafed.org/
More information through EDIRC
|Order Information:|| Web: http://www.phil.frb.org/publicaffairs/pubs/index.html Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey Lin, 2009.
"Technological adaptation, cities and new work,"
09-17, Federal Reserve Bank of Philadelphia.
- Toni M. Whited & Jonas D.M. Fisher & Morris A. Davis, 2010.
"Macroeconomic Implications of Agglomeration,"
2010 Meeting Papers
1330, Society for Economic Dynamics.
- Toni Whited & Jonas Fisher & Morris Davis, 2013. "Macroeconomic Implications of Agglomeration," 2013 Meeting Papers 893, Society for Economic Dynamics.
- Morris A. Davis & Jonas D. M. Fisher & Toni M. Whited, 2010. "Macroeconomic implications of agglomeration," Working Paper Series WP-2010-02, Federal Reserve Bank of Chicago.
- Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2010.
"The Identification of Agglomeration Economies,"
- Pierre-Philippe COMBES & Gilles DURANTON & Laurent GOBILLON, 2010. "The Identification of Agglomeration Economies," Working Papers 2010-52, Centre de Recherche en Economie et Statistique.
- Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2010. "The Identification of Agglomeration Economies," CEPR Discussion Papers 8119, C.E.P.R. Discussion Papers.
- Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2011. "The Identification of Agglomeration Economies," Post-Print halshs-00754555, HAL.
- Hoyt Bleakley & Jeffrey Lin, 2007.
"Thick-market effects and churning in the labor market: evidence from U.S. cities,"
07-23, Federal Reserve Bank of Philadelphia.
- Bleakley, Hoyt & Lin, Jeffrey, 2012. "Thick-market effects and churning in the labor market: Evidence from US cities," Journal of Urban Economics, Elsevier, vol. 72(2), pages 87-103.
- Carlino, Gerald A. & Saiz, Albert, 2008.
IZA Discussion Papers
3778, Institute for the Study of Labor (IZA).
- Satyajit Chatterjee, 2003. "Agglomeration economies: the spark that ignites a city?," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 6-13.
- Nathaniel Baum-Snow, 2007. "Did Highways Cause Suburbanization?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 775-805.
When requesting a correction, please mention this item's handle: RePEc:fip:fedpbr:y:2011:i:q3:p:1-13. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Beth Paul)
If references are entirely missing, you can add them using this form.