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Are Big Cities Important for Economic Growth?

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Listed:
  • Matthew Turner
  • David N. Weil

Abstract

Cities are often described as engines of economic growth. We assess this statement quantitatively. We focus on two mechanisms: a static agglomeration effect that makes production in bigger cities more efficient, and a dynamic effect whereby urban scale impacts the productivity of invention, which in turn determines the speed of technological progress for the country as a whole. Using estimates of these effects from the literature and MSA-level patent and population data since 1900, we ask how much lower US output would be in 2010 if city size had been limited to one million or one hundred thousand starting in 1900. These effects are small. If city sizes had been limited to one million people since 1900, output in 2010 would have been only 8% lower than its observed value.

Suggested Citation

  • Matthew Turner & David N. Weil, 2025. "Are Big Cities Important for Economic Growth?," NBER Working Papers 33334, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33334
    Note: EFG
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    More about this item

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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