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Unravelling urban advantages - A meta-analysis of agglomeration economies

Author

Listed:
  • Stuart Donovan

    (Vrije Universiteit Amsterdam)

  • Thomas de Graaff

    (Vrije Universiteit Amsterdam)

  • Henri de Groot

    (Vrije Universiteit Amsterdam)

  • Carl Koopmans

    (Vrije Universiteit Amsterdam)

Abstract

A large body of literature considers the productive advantages of cities, or “agglomeration economies†. Most empirical studies report positive agglomeration economies, although large variation exists in the magnitude of estimates. We use a meta-analysis to explore this variation, drawing on 6,684 estimates from 295 studies that cover 54 countries and span six decades. Using rich data and robust methods, we unify and extend earlier reviews. For our preferred combination of study attributes, we find agglomeration elasticities are likely to lie in the range 2.7–6.4%. Our findings confirm the controls enabled by detailed data give rise to smaller estimates. We also document several trends, with overall estimates rising from 1980–2000 and then falling. Estimates for manufacturing sectors, in contrast, fell for the entire six decades covered by our data. We speculate on possible causes of these trends, such as urban congestion, technological shocks, freight costs, and regulatory settings.

Suggested Citation

  • Stuart Donovan & Thomas de Graaff & Henri de Groot & Carl Koopmans, 2021. "Unravelling urban advantages - A meta-analysis of agglomeration economies," Tinbergen Institute Discussion Papers 21-026/VIII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20210026
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    More about this item

    Keywords

    agglomeration; meta-analysis; urbanisation; cities; productivity;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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