Metropolitan Labor Productivity and Urban Spatial Structure

This paper questions the extent to which agglomeration economies can develop in a cluster of close-by cities, so-called polycentric metropolitan areas or polycentric urban regions (PURs). Theory suggests that agglomeration economies are nowadays increasingly associated with more dispersed spatial structures. Are polycentric metropolitan areas, despite their polycentric spatial layout, able to reap the advantages of urban size to a similar extent as monocentric metropolitan areas? By means of a novel method, the most monocentric metropolitan areas (a MSA or CSA dominated by a single city) and most polycentric metropolitan areas (MSAs or CSAs in which population is rather evenly distributed over their constituent cities) in the USA are identified. Polycentric metropolitan areas are furthermore divided into conurbations and polycentric metropolitan areas proper, which is based on the question of whether the cities in a polycentric metropolitan area are part of a contiguous urban area (conurbation) or not. Labor productivity serves as a proxy for agglomeration economies. Using 2006 data, strong evidence was found for metropolitan labor productivity, and hence agglomeration economies, being higher in polycentric metropolitan areas compared to monocentric ones. Referring to Alonso, this means that in polycentric metropolitan areas, cities are able to ‘borrow size’ from each other. The findings suggest that the location of a city nearby other relatively similar-sized cities results in a ‘borrowed size’ effect of 11 % in polycentric metropolitan areas. This borrowed size effects suggests that polycentric metropolitan areas on average outperform monocentric, single cities, controlling for the size of the urban population, urban density, human capital and the structure of the metropolitan economy. A similar result is found when explaining mean annual wages, with an elasticity of polycentricity of 5.7 %. Polycentric conurbations resemble monocentric metropolitan areas more than polycentric metro areas. Furthermore, it is demonstrated that while many sectors of economic activity have a stronger presence in monocentric metropolitan areas, productivity in many sectors tends to be higher in polycentric metropolitan areas. One explanation is that the spatial range of agglomeration advantages has been regionalized, while agglomeration diseconomies remain relatively more limited to the local level.