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City Size, Distance and Formal Employment Creation

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  • O´Clery, Neave
  • Lora, Eduardo

Abstract

Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a priori a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.

Suggested Citation

  • O´Clery, Neave & Lora, Eduardo, 2016. "City Size, Distance and Formal Employment Creation," Research Department working papers 959, CAF Development Bank Of Latinamerica.
  • Handle: RePEc:dbl:dblwop:959
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    File URL: https://scioteca.caf.com/handle/123456789/959
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    Cited by:

    1. Eduardo Lora, 2016. "The Path to Labor Formality: Urban Agglomeration and the Emergence of Complex Industries," CID Working Papers 78, Center for International Development at Harvard University.
    2. Andres Gomez-Lievano & Vladislav Vysotsky & Jose Lobo, 2018. "Artificial Increasing Returns to Scale and the Problem of Sampling from Lognormals," Papers 1807.09424, arXiv.org, revised Jul 2020.

    More about this item

    Keywords

    Ciudades; Educación; Investigación socioeconómica; Sector privado; Trabajo y protección social;
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