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Cities and Specialization: Evidence from South Asia

Author

Listed:
  • Marcel Fafchamps
  • Forhad Shilpi
  • DECRG
  • The World Bank

Abstract

Theories of city formation typically revert around agglomeration externalities driven by returns to specialization. Using survey data from Nepal, we test these theories by examining the relationship between proximity to urban centers and the organization of labor. We show that wards located in and near cities have more diversified and more market oriented activities. This suggests returns to specialization harnessed through the market. Wage work, work away from home, and unemployment are more prevalent in and around cities. These effects are felt up to four hours of travel time from large cities. We also find evidence of a weak relationship between city size and firm size. Urban specialization, however, does not extend to household chores. Urbanization is associated with lower female labor market participation and with specialization of women in market-related activities or strictly home-based chores.

Suggested Citation

  • Marcel Fafchamps & Forhad Shilpi & DECRG & The World Bank, 2003. "Cities and Specialization: Evidence from South Asia," Economics Series Working Papers 139, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:139
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    Keywords

    spatial specialization; urbanization; household chores;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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