Abstract
Social interactions are considered pivotal to agglomeration economies. We explore a unique dataset on mobile phone calls to examine how distance and population density shape the structure of social interactions. Exploiting an exogenous change in travel times, we show that distance is highly detrimental to interpersonal exchange. Despite distance-related costs, we find no evidence that urban residents benefit from larger networks when spatial sorting is accounted for. Higher density rather generates a more efficient network in terms of matching and clustering. These differences in network structure capitalize into land prices, corroborating the hypothesis that agglomeration economies operate via network efficiency.
Highlights
Social interactions lie at the nexus of two key themes in economics: sustained aggregate growth and the concentration of economic activity in cities
In reference to urban theorist Jane Jacobs (1969), Lucas (1988) suggests that these externalities are especially prevalent in cities, which consequentially act as engines of growth. This notion reflects one of the classic agglomeration forces described by Alfred Marshall (1890), who argues that the dense concentration in cities facilitates the flow of information and knowledge, since social interactions diminish over space
This paper studies the relation between spatial structure and social interactions in order to test fundamental assumptions underlying the agglomeration forces discussed in the literature
Summary
Social interactions lie at the nexus of two key themes in economics: sustained aggregate growth and the concentration of economic activity in cities. In reference to urban theorist Jane Jacobs (1969), Lucas (1988) suggests that these externalities are especially prevalent in cities, which consequentially act as engines of growth This notion reflects one of the classic agglomeration forces described by Alfred Marshall (1890), who argues that the dense concentration in cities facilitates the flow of information and knowledge, since social interactions diminish over space. The analysis builds on anonymised mobile phone calls between June 2015 and May 2016 This allows us to examine the interplay between local characteristics and social interactions as we observe comprehensive communication patterns and location information derived from transmitting antennas and billing data. We discuss the main findings with reference to the related literature
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