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The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States

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Edward L. Glaeser
Joshua D. Gottlieb

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Abstract

Empirical research on cities starts with a spatial equilibrium condition: workers and firms are assumed to be indifferent across space. This condition implies that research on cities is different from research on countries, and that work on places within countries needs to consider population, income and housing prices simultaneously. Housing supply elasticity will determine whether urban success shows up in more people or higher incomes. Urban economists generally accept the existence of agglomeration economies, which exist when productivity rises with density, but estimating the magnitude of those economies is difficult. Some manufacturing firms cluster to reduce the costs of moving goods, but this force no longer appears to be important in driving urban success. Instead, modern cities are far more dependent on the role that density can play in speeding the flow of ideas. Finally, urban economics has some insights to offer related topics such as growth theory, national income accounts, public economics and housing prices.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14806.

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Date of creation: Mar 2009
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Handle: RePEc:nbr:nberwo:14806

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Find related papers by JEL classification:
D0 - Microeconomics - - General
D00 - Microeconomics - - General - - - General
R0 - Urban, Rural, and Regional Economics - - General
R00 - Urban, Rural, and Regional Economics - - General - - - General

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Full references

Cited by:
(explanations, 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.)

  1. Shawn Kantor & Alexander Whalley, 2009. "Do Universities Generate Agglomeration Spillovers? Evidence from Endowment Value Shocks," NBER Working Papers 15299, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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