Urban Agglomeration Effects in India: Evidence from Town-Level Data

Asian Development Review 34:2

28 Pages Posted: 25 Aug 2017

See all articles by Rana Hasan

Rana Hasan

Asian Development Bank; University of Maryland - Department of Economics

Yi Jiang

Asian Development Bank

Radine Michelle Rafols

Asian Development Bank

Date Written: August 23, 2017

Abstract

Combining multiple data sets for India, we estimate the elasticity of wages with respect to town population and density between 1% and 2%, which is smaller than estimates in the literature based on district-level analysis. We also find that the employment share of firms with 10 or more workers — which typically describes firms that operate in the formal sector — is positively associated with city population and negatively associated with city density. Town characteristics such as infrastructure availability, geographic location, educational services, and industrial structure also play a role in explaining city productivity and the presence of relatively large firms. Overall, we interpret our results to suggest that there is scope to realize more fully urbanization’s potential by addressing issues related to urban planning, infrastructure, and public service delivery, as has been emphasized previously by observers of Indian urbanization.

Keywords: agglomeration, formal sector, Indian city

JEL Classification: O15, R12, R23

Suggested Citation

Hasan, Rana and Jiang, Yi and Rafols, Radine Michelle, Urban Agglomeration Effects in India: Evidence from Town-Level Data (August 23, 2017). Asian Development Review 34:2. Available at SSRN: https://ssrn.com/abstract=3025049

Rana Hasan

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
808-944-7590 (Phone)
808-944-7399 (Fax)

Yi Jiang (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Radine Michelle Rafols

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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