The Growth of Cities

71 Pages Posted: 13 Aug 2013

See all articles by Gilles Duranton

Gilles Duranton

University of Pennsylvania - Real Estate Department

Diego Puga

Centre for Monetary and Financial Studies (CEMFI)

Date Written: August 2013

Abstract

Why do cities grow in population, surface area, and income per person? Which cities grow faster and why? To these questions, the urban growth literature has offered a variety of answers. Within an integrated framework, this chapter reviews key theories with implications for urban growth. It then relates these theories to empirical evidence on the main drivers of city growth, drawn primarily from the United States and other developed countries. Consistent with the monocentric city model, fewer roads and restrictions on housing supply hinder urban growth. The fact that housing is durable also has important effects on the evolution of cities. In recent decades, cities with better amenities have grown faster. Agglomeration economies and human capital are also important drivers of city growth. Although more human capital, smaller firms, and a greater diversity in production foster urban growth, the exact channels through which those effects percolate are not clearly identified. Finally, shocks also determine the fate of cities. Structural changes affecting the broader economy have left a big footprint on the urban landscape. Small city-specific shocks also appear to matter, consistent with the recent wave of random growth models.

Keywords: agglomeration economies, amenities, land use, transportation, urban growth

JEL Classification: C52, D24, R12

Suggested Citation

Duranton, Gilles and Puga, Diego, The Growth of Cities (August 2013). CEPR Discussion Paper No. DP9590, Available at SSRN: https://ssrn.com/abstract=2309234

Gilles Duranton (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Diego Puga

Centre for Monetary and Financial Studies (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain

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