Rank-size distribution of urban employment in labour market areas

Abstract

This paper examines the rank-size distribution of employment in cities considering the designation of unified labour market areas (LMAs). The empirical application refers to Greece and the dataset includes population and employment at the municipal and local commune levels as well as LMAs originating from commuting patterns between communes. It is found that the employment rank-size distribution based on municipalities substantially overestimates the size of smaller peripheral town areas, where labour agglomerations typically take place at finer spatial scales, and underestimates agglomerations around larger urban areas. The use of LMAs as an alternative spatial unit of analysis entails a less even geographical distribution of workers, particularly when adopting a 10% commuting threshold. Moreover, a threshold regression is used to facilitate the distinction between urban and rural areas, specifying the LMA size beyond which substantial urbanisation effects arise and signifying that about 80% of the total employment corresponds to urban employment. The findings can have important implications for the formulation and evaluation of policies to manage labour agglomeration economies in metropolitan and peripheral urban and rural areas for the sustainable and equitable growth of a country.