Abstract
The factors that account for the differences in the economic productivity of urban areas have remained difficult to measure and identify unambiguously. Here we show that a microscopic derivation of urban scaling relations for economic quantities vs. population, obtained from the consideration of social and infrastructural properties common to all cities, implies an effective model of economic output in the form of a Cobb-Douglas type production function. As a result we derive a new expression for the Total Factor Productivity (TFP) of urban areas, which is the standard measure of economic productivity per unit of aggregate production factors (labor and capital). Using these results we empirically demonstrate that there is a systematic dependence of urban productivity on city population size, resulting from the mismatch between the size dependence of wages and labor, so that in contemporary US cities productivity increases by about 11% with each doubling of their population. Moreover, deviations from the average scale dependence of economic output, capturing the effect of local factors, including history and other local contingencies, also manifest surprising regularities. Although, productivity is maximized by the combination of high wages and low labor input, high productivity cities show invariably high wages and high levels of employment relative to their size expectation. Conversely, low productivity cities show both low wages and employment. These results shed new light on the microscopic processes that underlie urban economic productivity, explain the emergence of effective aggregate urban economic output models in terms of labor and capital inputs and may inform the development of economic theory related to growth.
Highlights
The importance of population size as a major determinant of the intensity of socio-economic activity in urban areas has recently been emphasized by research applying scaling analyzes to a diverse spectrum of urban indicators [1,2,3,4]
We do not claim that there is a causal relation between urban scaling and urban productivity; scaling reveals a systematic relationship between urban population size and productivity, which itself is a manifestation of a more general relationship between population size and productivity [5,6]
We show that the constancy of a is a consequence of urban scaling relations and their underlying microscopic dynamics, and use these relations to obtain a new expression for Ai(t,Ni)
Summary
The importance of population size as a major determinant of the intensity of socio-economic activity in urban areas has recently been emphasized by research applying scaling analyzes to a diverse spectrum of urban indicators [1,2,3,4]. Its analytical punch stems from the observation that this response is often a simple, regular, and systematic function over a wide range of sizes, indicating that there are underlying generic constraints at work on the system as it develops. Too, manifest non-trivial scaling across many metrics, both infrastructural and socio-economic, and scale in a similar way across a variety of urban systems worldwide. This is surprising since cities are quintessential complex adaptive systems manifesting multiple spatio-temporal scales with emergent dynamics that are typically viewed as historically contingent. Causality stems from the ways in which being embedded inside larger agglomerations fundamentally affects how individuals interact with each other
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
