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Are cities the real engines of growth in the EU?

Author

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  • Dijkstra, Lewis
  • Kompil, Mert
  • Proietti, Paola

Abstract

Between 2001 and 2021, capital metro regions had the fastest productivity growth in the EU, followed by non-metro regions, while it was much lower in other metro regions. Capitals reduced their sectoral concentration, while the other regions increased it. Our shift-share analysis confirms that capitals relied entirely on productivity growth within sectors, while the other two types benefitted also from shifting jobs to more productive sectors. Our regression analysis showed that convergence and being a capital boosted productivity growth. Population density also strengthened productivity growth, but not enough to prevent other-metro regions from lagging behind the non-metro regions.

Suggested Citation

  • Dijkstra, Lewis & Kompil, Mert & Proietti, Paola, 2025. "Are cities the real engines of growth in the EU?," LSE Research Online Documents on Economics 129664, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:129664
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    File URL: http://eprints.lse.ac.uk/129664/
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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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