Real Estate Papers

Document Type

Journal Article

Date of this Version

2015

Publication Source

World Bank Research Observer

Volume

30

Issue

1

Start Page

39

Last Page

73

DOI

10.1093/wbro/lku006

Abstract

This paper examines the effects of urbanization on development and growth. It begins with a labor market perspective and emphasizes the importance of agglomeration economies, both static and dynamic. It then argues that more productive jobs in cities do not exist in a void and underscores the importance of job and firm dynamics. In turn, these dynamics are shaped by the broader characteristics of urban systems. A number of conclusions are drawn. First, agglomeration effects are quantitatively important and pervasive. Second, the productive advantage of large cities is constantly eroded and must be sustained by new job creation and innovation. Third, this process of creative destruction in cities, which is fundamental for aggregate growth, is determined in part by the characteristics of urban systems and broader institutional features. We highlight important differences between developing countries and more advanced economies. A major challenge for developing countries is to reinforce the role of their urban systems as drivers of economic growth.

Copyright/Permission Statement

This is a pre-copyedited, author-produced PDF of an article accepted for publication in World Bank Research Observer following peer review. The version of record is available online at: http://wbro.oxfordjournals.org/content/30/1/39.abstract.

Keywords

cities and development, local labor markets, jobs and firm dynamics, urban systems

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Date Posted: 27 November 2017

This document has been peer reviewed.