Aggregate metropolitan employment growth and the deconcentration of metropolitan employment

Abstract

In this paper we document that the disparity in employment densities across US metropolitan areas has lessened substantially over the postwar period. To account for this deconcentration of metropolitan employment, we develop a system-of-cities model in which an increase in aggregate metropolitan employment causes congestion costs to increase faster for the more dense metro areas. A calibrated version of the model reveals that the (roughly) two-and-a-half-fold increase in postwar aggregate metropolitan employment implies, by itself, more deconcentration than actually observed. Thus, rising aggregate metropolitan employment is a powerful force favoring deconcentration, although some benefit of greater employment density appears to have partially offset the effects of rising congestion costs for the more dense metro areas.