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The Equilibrium Distribution Of Population And Wages In A System Of Cities

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Listed:
  • James R. Khan

    (University of Tennessee)

  • Haim Ofek

    (SUNY Binghamton)

Abstract

The positive relationship between wages and city size is shown to be consistent with equilibrium conditions predetermined by the dynamics of market forces. This means that wages are expected to rise with city size under diverse technological and institutional conditions, assuming mobility is unimpaired. A new interpretation for a widely observed statistical regularity is thus suggested. The new interpretation is consistent with conventional economic explanations (driven by the principle of compensating wage differentials in the presence of urban disamenities and rising costs of living). It is less restrictive, however. Sweeping assumptions about deteriorating amenities or rising cost of living throughout the entire range of city size are no longer required. These conditions need only hold in the immediate vicinity of equilibrium. In fact, their existence is shown to be a direct outcome of equilibrium, rather than an independent ex ante cause.

Suggested Citation

  • James R. Khan & Haim Ofek, 1992. "The Equilibrium Distribution Of Population And Wages In A System Of Cities," The Review of Regional Studies, Southern Regional Science Association, vol. 22(3), pages 201-216, Winter.
  • Handle: RePEc:rre:publsh:v22:y:1992:i:3:p:201-216
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    References listed on IDEAS

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    1. Tolley, George S., 1974. "The welfare economics of city bigness," Journal of Urban Economics, Elsevier, vol. 1(3), pages 324-345, July.
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    3. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    4. Victor R. Fuchs, 1967. "City Size Differentials," NBER Chapters, in: Differentials in Hourly Earnings by Region and City Size, 1959, pages 10-16, National Bureau of Economic Research, Inc.
    5. Curtis J. Simon, 1988. "Frictional Unemployment and the Role of Industrial Diversity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 715-728.
    6. Segal, David, 1976. "Are There Returns to Scale in City Size?," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 339-350, August.
    7. Victor R. Fuchs, 1967. "Differentials in Hourly Earnings by Region and City Size, 1959," NBER Books, National Bureau of Economic Research, Inc, number fuch67-1.
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    Cited by:

    1. David E. Clark & Thomas A. Knapp, 1995. "The Hedonic Price Structure Of Faculty Compensation At U.S. Colleges And Universities," The Review of Regional Studies, Southern Regional Science Association, vol. 25(2), pages 117-141, Fall.

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