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Evidence on agglomeration economies, diseconomies, and growth

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  • Christopher H. Wheeler

    (Department of Economics, Tulane University, 206 Tilton Hall, New Orleans, LA 70118, USA)

Abstract

Conventional urban economic analysis suggests that a local economy's size is closely related to a number of features, including levels of human capital and the availability of specialized inputs, which are likely to influence positively the rate at which it accumulates further economic activity. At the same time, urban theory also suggests that once cities reach a certain level of size, these agglomeration benefits begin to peter out, while diseconomies rise rapidly. Consequently, we should see an 'inverted U-shaped' pattern of growth with respect to economic size-rates of growth first rise, then fall as size increases. This paper shows that, while such a pattern is largely absent from recent data on growth in metropolitan area population and employment, it emerges strikingly in county-level data. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • Christopher H. Wheeler, 2003. "Evidence on agglomeration economies, diseconomies, and growth," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 79-104.
  • Handle: RePEc:jae:japmet:v:18:y:2003:i:1:p:79-104
    DOI: 10.1002/jae.678
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    References listed on IDEAS

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    1. Eaton, Jonathan & Eckstein, Zvi, 1997. "Cities and growth: Theory and evidence from France and Japan," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 443-474, August.
    2. Garcia-Mila, Teresa & McGuire, Therese J., 1993. "Industrial mix as a factor in the growth and variability of states' economies," Regional Science and Urban Economics, Elsevier, vol. 23(6), pages 731-748, December.
    3. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    4. Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1.
      • Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, January.
    5. Glaeser, Edward L., 1999. "Learning in Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 254-277, September.
    6. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    7. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 739-767.
    8. Xavier Gabaix, 1999. "Zipf's Law and the Growth of Cities," American Economic Review, American Economic Association, vol. 89(2), pages 129-132, May.
    9. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
    10. Edward L. Glaeser, 1998. "Are Cities Dying?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 139-160, Spring.
    11. Evans, Paul & Karras, Georgios, 1996. "Do Economies Converge? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 384-388, August.
    12. Duncan Black & Vernon Henderson, 1999. "A Theory of Urban Growth," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 252-284, April.
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    Cited by:

    1. André Mollick & Marie Mora, 2012. "The impact of higher education on Texas population and employment growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 135-149, February.
    2. Bumsoo Lee & Peter Gordon, 2007. "Urban Spatial Structure and Economic Growth in US Metropolitan Areas," Working Paper 8564, USC Lusk Center for Real Estate.
    3. repec:kap:iaecre:v:11:y:2005:i:2:p:231-242 is not listed on IDEAS
    4. Armando Arellano & Thomas Fullerton, 2005. "Educational Attainment and Regional Economic Performance in Mexico," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(2), pages 231-242, May.
    5. Garmestani, Ahjond S. & Allen, Craig R. & Gallagher, Colin M., 2008. "Power laws, discontinuities and regional city size distributions," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 209-216, October.
    6. Boris A. Portnov & Moshe Schwartz, 2009. "Urban Clusters As Growth Foci," Journal of Regional Science, Wiley Blackwell, vol. 49(2), pages 287-310.

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