1) The main drivers of city population growth are amenities like climate, transportation infrastructure like roads, and human capital factors like education levels. 2) While these factors explain about half of city growth patterns, there are still many unknowns like the impacts of urban policies and leadership. 3) Cities may positively impact economic growth by fostering physical capital accumulation through agglomeration economies and especially by greatly increasing human capital development and productivity.

1. Cities and growth
Gilles Duranton
Wharton
oecd, 26 September 2014

2. City population growth Urbanisation
Technological change
Growth in output per capita

3. Three sets of issues
The eect of economic growth and technological change
on cities
The interaction between urbanisation and development
The eects of cities on economic growth and
technological change

4. What drives the population growth of cities?
It is a hard question but much easier than the identi

5. cation
of drivers of country growth
Many more cities than countries
Far fewer determinants
Lots more data
Population is easier to count than gdp
Data heterogeneity is less
A common history makes identi

6. cation easier
As a result, some progress

7. The main drivers of population growth for US
cities
Amenities
Roads
Human capital and entrepreneurship

8. Some caveats
We know a lot more about us cities but most results have
been replicated elsewhere in fully urbanised countries
Despite some well identi

9. ed channels, we can explain
maybe half the story
There are some areas of complete ignorance. For instance:
{ Urban policies
{ Urban leadership / governance

10. Amenities
Very strong association: 1 s.d. of January temperature
leads to 0.6 s.d. of population growth
Focusing on exogenous amenities alleviates simultaneity
concerns
Warm Januaries may still be correlated with other
growth factors
Main explanation: a wealth/demand eect

11. Transport
Another strong association: 1 s.d. of Interstate Highway
km leads to 0.7 s.d. of population growth
Roads also induce urban decentralisation
Roads are not randomly given. Identi

12. cation using
historical instruments, random placements of rural roads,
historical accidents
Main explanation: roads lower travel costs and make a
city cheaper as predicted by the monocentric model
Wrinkle: the eects of roads on population growth is
`small'
More generally, transport technology greatly shapes cities

13. Human capital
The third strong association: 1 s.d. of the initial share of
university graduates leads to 0.25 s.d. of population
growth
Worry the more skilled may choose to locate in fast
growing cities
A variety of identi

14. cation strategies including the
establishment of land grant colleges c. 1860
Entrepreneurship as a speci

15. c form of human capital
Key underlying mechanism: cities are better places for
exploiting human capital and accumulating it through
learning

16. Summary
Amenities, roads, and human capital are the main known
drivers of city population growth
Results are broadly consistent across rich (`oecd')
countries that are fully urbanised
Less is known about city growth in developing countries
which are still urbanising
Transportation matters perhaps more whereas the role of
amenities is in doubt
This is the world inside the technology frontier and inside
the urbanisation frontier that comprises the large
majority of mankind

17. The classic plot
12
10
8
6
4
log GDP per capita, 2011
rate of urbanization, 2012
0 20 40 60 80 100
Source: World Bank. 189 countries. The horizontal axis urbanization
rate is the percentage share of population living in cities in 2012. The
vertical axis represents the natural log of GDP per capita in current US
dollar for 2011.

18. Well known, extremely robust
Each extra percentage point of urban population is
associated with an extra 5 percent of gdp per capita
Agglomeration economies can explain at most a small
part of the relationship (a

19. fth?)
Models of structural change?
{ Simple models of manufacturing pull require
quantitatively implausible parameter values
{ Models of rural push are even worse
{ Suggestive of strong frictions in the process or that
urbanisation is an outcome of `development'
{ We need to take this question more seriously. 50
million rural dwellers move to cities every year

20. The really important but really hard question
Do cities aect growth?
We can write models where they do
Identifying out of the cross-section of countries is really
hard
Route 1: use the cross-section of cities
{ But many questions will be hard to analyse
{ We cannot look at gdp growth directly but only at
correlates of growth
Route 2: rely more strongly on models

21. A well-established fact...
Innovative activity is geographically highly concentrated
RD labs are much more concentrated than labour in
the us
Several large us cities receive a share of patents that is 5
times of more their share of population
For small metropolitan, the population share is nearly 3
times the patent share
For non-metro areas, it is more than 10 times.
Strong tendency for RD labs and establishments in
RD intensive activities to locate extremely close to each
other