Cities, Skills, and Regional Change
Edward L. Glaeser
Harvard University - John F. Kennedy School of Government, Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)
Giacomo A. M. Ponzetto
CREI - Universitat Pompeu Fabra
Harvard University - Harvard Kennedy School (HKS)
March 31, 2011
Harvard Institute of Economic Research Discussion Paper No. 2191
One approach to urban areas emphasizes the existence of certain immutable relationships, such as Zipf's or Gibrat's Law. An alternative view is that urban change reflects individual responses to changing tastes or technologies. This paper examines almost 200 years of regional change in the U.S. and finds that few, if any, growth relationships remain constant, including Gibrat's Law. Education does a reasonable job of explaining urban resilience in recent decades, but does not seem to predict county growth a century ago. After reviewing this evidence, we present and estimate a simple model of regional change, where education increases the level of entrepreneurship. Human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession.
Number of Pages in PDF File: 65
Keywords: Gibrat, Urban, Entrepreneurship, Land-Use
JEL Classification: B25
Date posted: April 12, 2011
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