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Evidence on agglomeration economies, diseconomies, and growth

  • Christopher H. Wheeler

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

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.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 18 (2003)
Issue (Month): 1 ()
Pages: 79-104

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Handle: RePEc:jae:japmet:v:18:y:2003:i:1:p:79-104
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  1. 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.
  2. Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1, December.
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  3. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
  4. Edward Glaeser, 1997. "Learning in Cities," NBER Working Papers 6271, National Bureau of Economic Research, Inc.
  5. Edward L. Glaeser & Jose A. Scheinkman & Andrei Shleifer, 1995. "Economic Growth in a Cross-Section of Cities," NBER Working Papers 5013, National Bureau of Economic Research, Inc.
  6. 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.
  7. 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.
  8. 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 384-88, August.
  9. 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.
  10. 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.
  11. Edward L. Glaeser, 1998. "Are Cities Dying?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 139-160, Spring.
  12. Xavier Gabaix, 1999. "Zipf's Law and the Growth of Cities," American Economic Review, American Economic Association, vol. 89(2), pages 129-132, May.
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