measuring urban economic density agglomeration economies are at the heart of urban economics driving the existence and extent of cities and are central to structural transformation and the urbanization process this paper evaluates the use of different measures of economic density in assessing urban agglomeration effects by examining how well they explain household income differences across cities and neighborhoods in six african countries the paper examines simple scale and density measures and more nuanced ones that capture the extent of clustering within cities the evidence suggests that more nuanced measures attempting to capture within city differences in the extent of clustering do no better than a simple density measure in explaining income differences across cities at least for the current degree of accuracy in measuring clustering however simple city scale measures such as total population are inferior to density measures and to some degree misleading the analysis finds large household income premiums from being in bigger and particularly denser cities over rural areas in africa indicating that migration pull forces remain very strong in the structural transformation process moreover the marginal effects of increases in urban density on household income are very large with density elasticities of 0 6 in addition to strong city level density effects the analysis finds strong neighborhood effects for household incomes overall city density and density of the neighborhood matter

networking off madison avenue known for the key role that networking plays in the operation of agencies where interviews suggest that informal networking among close neighbors is critical to many agencies success networking involves the exchange of ideas and while there is no market place for these ideas exchanges may be more deliberate rather than just marshall s 1890 mysteries of the air type of information spillovers this paper examines the effect on productivity of having more near advertising agency neighborhoods and hence better opportunities for meetings and exchange within manhattan we will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern manhattan a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited the finding indicates that having a high density of commercial establishments is important in enhancing local productivity an issue in lucas and rossi hansberg 2002 where within business district spatial decay of spillovers plays a key role we will argue also that in manhattan advertising agencies trade off the higher rent costs of being in bigger clusters nearer centers of action against the lower rent costs of operating on the fringes away from high concentrations of other agencies introducing the idea of trade offs immediately suggests heterogeneity is involved we will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters specifically because they benefit more from networking while all 1 the research in this paper was conducted while the authors were census bureau research associates at the boston research data center research results and conclusions expressed are those of the authors and do not necessarily indicate concurrence by the census bureau the paper has been screened to ensure that no confidential data are revealed we acknowledge helpful comments from andrew foster on aspects of the paper and from participants in seminars at brown university lse and the university of toronto

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

inequality and city size between 1979 and 2007 a strong positive monotonic relationship between wage inequality and city size has developed this paper investigates the links between this emergent city size inequality premium and the contemporaneous nationwide increase in wage inequality after controlling for the skill composition of the workforce across cities of different sizes we show that at least 23 percent of the overall increase in the variance of log hourly wages in the united states from 1979 to 2007 is explained by the more rapid growth in the variance of log wages in larger locations relative to smaller locations this influence occurred throughout the wage distribution and was most prevalent during the 1990s more rapid growth in within skill group inequality in larger cities has been by far the most important force driving these city size specific patterns in the data differences in the industrial composition of cities of different sizes explain up to one third of this city size effect these results suggest an important role for agglomeration economies in generating changes in the wage structure during the study period

productivity gains from geographic concentration of human capital evidence from the cities abstract based on recent theoretical developments the argument is made that the average level of human capital is a local public good cities with higher average levels of human capital should therefore have higher wages and higher land rents after conditioning on the characteristics of individual workers and dwellings this prediction is supported by data for standard metropolitan statistical areas smsas in the united states where the smsa average levels of formal education and work experience are used as proxies for the average level of human capital the alternative explanations of omitted smsa variables and self selection are evaluated an estimate of the effect of an additional year of average education on total factor productivity is computed

frictional labour mobility we build a dynamic model of migration where in addition to standard relocation costs workers face spatial frictions that decrease their ability to compete for distant job opportunities we estimate the model on a matched employer employee panel dataset describing labour market transitions within and between the 100 largest french cities our identification strategy is based on the premise that frictions affect the frequency of job transitions while mobility costs impact the distribution of accepted wages we find that 1 controlling for spatial frictions reduces mobility cost estimates by one order of magnitude 2 the urban wage premium is driven by better opportunities for local job to job transitions in larger cities 3 migration reduces lifetime inequalities by providing insurance against unsatisfactory initial location draws 4 labour mobility policies based on relocation subsidies are inefficient unlike switching from nationwide to local minimum wages

do wages rise with job seniority a reassessment the authors provide new estimates of the return to job seniority using a dataset similar to that employed in joseph altonji and robert shakotko do wages rise with job seniority review of economic studies 1987 and robert topel specific capital mobility and wages journal of political economy 1991 they consider the strengths and weaknesses of these studies treatment of economy wide trends their dating conventions for tenure and wages their handling of wage observations that might span multiple jobs and their estimation approaches re estimation points to an effect often years of tenure on the log wage equal to 11 which is above the preferred estimate of altonji and shakotko but far below that of topel changes in earnings distributions and in the employment relationship motivate the examination of more recent data perhaps surprisingly the return to tenure has probably increased over time

agglomeration city size and crime this paper analyzes the relationship between crime and agglomeration where the land labor product and crime markets are endogenously determined our main theoretical findings are the following i better accessibility to jobs decreases crime in the short run but may increase crime in the long run ii the per capita crime rate increases with city size iii when allowing for endogenous policing lower commuting costs make the impact of police on crime more efficient

debt relief and the international enforcement of loan contracts it is now apparent that the governments of many developing countries will not repay their debts as initially contracted creditors have already forgiven loans to some poor borrowers in africa loans to several middle income borrowers mostly in latin america trade in secondary markets at enormous discounts below 10 percent of face value in some cases creditors and debtors are negotiating the status of these debts with relief now likely for them as well since 1983 the situation has been seen to be sufficiently troubled to constitute a debt crisis although whether the debts actually caused the stagnation and financial chaos in many debtor countries is questionable poor economic management at home along with some adverse changes abroad probably have more to do with their plight while the debts themselves may not have caused the crisis creditors and creditor governments must now adjust to the realization that full repayment is either infeasible or that enforcing full payment is undesirable from the point of view of creditor countries as a whole the question now is what to do with these debts the baker and brady plans have increased u s government involvement in the debt crisis and have allocated public money toward its resolution the kenen plan discussed in this issue proposes still more public involvement and in all likelihood more public money each of these plans is an ad hoc response to the impasse that has arisen between some highly indebted countries and their private creditors and aspects of each plan may help resolve this impasse but none of these plans confronts the features of international capital markets that led to the crisis in the first place my argument here is that the debt crisis that began in 1983 arose from defects in how international capital markets operated the previous decade a goal of any

scale effects in markets with search estimates of aggregate matching functions may miss important scale effects in frictional labour markets because of the reactions of job seekers to scale we estimate a semi structural model of search and matching on a british sample of unemployed people testing for scale effects on the probability of receiving an offer and on the distribution of wage offers we find them only in wage offers but we also find that reservation wages rise to deliver higher post unemployment wages but not faster matches so aggregate matching functions should be unaffected by scale but wage equations should be showing them

the management of the developing countries debt guidelines and applications to brazil some principles which may be useful in formulating a debt management strategy are articulated there are four major policy recommendations 1 stretch out the repayment of the debt 2 monitor both exports and gdp 3 ignore the capital loss of the creditors and 4 watch the domestic deficit the goal of the recommendations is the maximization of the intertemporal welfare of the country under the constraint that it services its debt

external debt planning horizon and distorted credit markets the purpose of this paper is to study the behavior of the credit market and the role of policies in the presence of country risk with underdiscounting by the policy maker the underdiscounting may reflect political uncertainty where the effective planning horizon of the centralized government is shorter than that of the private sector the consequence of underdiscounting is to shift the supply curve facing the economy leftwards the role of optimal borrowing policies in the presence of country risk is to discourage borrowing for consumption purposes encourage investment in openness and discourage investment in activities that reduce openness the effect of underdiscounting by the policy maker is to increase the values of the optimal policy instruments i e to increase the magnitude of the borrowing taxes and subsidies increasing the relative importance of open activities can be viewed as a way to reduce the harmful consequences of underdiscounting underdiscounting may rationalize various conditionality clauses that will induce the economy to follow the desired credit market policies

cities workers and wages a structural analysis of the urban wage premium workers earn higher wages in cities vs rural areas this gap could arise because cities make workers more productive or it could be the result of a non random selection of workers into cities based on their ability and their endogenous history of career choices to untangle these issues this paper estimates a dynamic programming model which embeds the choice of residing in a city or rural area within a model of career choices over time after controlling for all the sources of selection and endogeneity the estimates indicate that a given worker does earn more in the city for white collar work but not for blue collar work in addition city work experience is found to be worth more than rural work experience in the rural area for white collar work but not for blue collar work these results support the interpretation that cities make white collar workers more productive and suggest that workers may consider moving to the city not only in terms of locational choice but also as a form of human capital investment copyright 2007 wiley blackwell

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

unequal migration and urbanisation gains in china abstract we assess the role of internal migration and urbanisation in china on the nominal earnings of three groups of workers rural migrants low skilled natives and high skilled natives we estimate the impact of many city and city industry characteristics that shape agglomeration economies as well as migrant and human capital externalities and substitution effects we also account for spatial sorting and reverse causality location matters for individual earnings but urban gains are unequally distributed high skilled natives enjoy large gains from agglomeration and migrants at the city level both conclusions also hold to a lesser extent for low skilled natives who are only marginally negatively affected by migrants within their industry by contrast rural migrants slightly lose from migrants within their industry while otherwise gaining from migration and agglomeration although less than natives the different returns from migration and urbanisation are responsible for a large share of wage disparities in china

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

power couples changes in the locational choice of the college educated 1940 1990 college educated couples are increasingly located in large metropolitan areas these areas were home to 32 percent of all college educated couples in 1940 39 percent in 1970 and 50 percent in 1990 we investigate whether this trend can be explained by increasing urbanization of the college educated or the growth of dual career households and the resulting severity of the colocation problem we argue that the latter explanation is the primary one smaller cities may therefore experience reduced inflows of human capital relative to the past and thus become poorer

cities and the growth of wages among young workers evidence from the nlsy abstract human capital based theories of cities suggest that large economically diverse urban agglomerations increase worker productivity by increasing the rate at which individuals acquire skills one largely unexplored implication of this theory is that workers in big cities should see faster growth in their earnings over time than comparable workers in smaller markets this paper examines this implication using data on a sample of young male workers drawn from the national longitudinal survey of youth 1979 cohort the results suggest that earnings growth does tend to be faster in large economically diverse local labor markets defined as counties and metropolitan areas than in smaller more specialized markets yet when examined in greater detail i also find that this association tends to be the product of faster wage growth due to job changes rather than faster wage growth experienced while on a particular job this result is consistent with the idea that cities enhance worker productivity through a job search and matching process and thus that an important aspect of learning in cities may involve individuals learning about what they do well

understanding the city size wage gap in 2000 wages of full time full year workers were more than 30 percent higher in metropolitan areas of over 1 5 million people than rural areas the monotonic relationship between wages and city size is robust to controls for age schooling and labor market experience in this paper we decompose the city size wage gap into various components we propose an on the job search model that incorporates latent ability search frictions firm worker match quality human capital accumulation and endogenous migration between large medium and small cities counterfactual simulations of the model indicate that variation in returns to experience and differences in wage intercepts across location type are the most important mechanisms contributing to the overall city size wage premium steeper returns to experience in larger cities is more important for college graduates while differences in wage intercepts is more important for high school graduates sorting on unobserved ability within education group and differences in labor market search frictions and distributions of firm worker match quality contribute little or slightly negatively to observed city size wage premia in both samples

optimal metering in the bottleneck congestion model abstract this paper examines whether metering entry to highways can reduce commuting costs we consider a modified version of the bottleneck congestion model which includes travel time downstream of the bottleneck the highway authority s choice of an entry rate enables it to substitute queuing time for travel time the authority s choice is constrained by the road s speed flow curve we find that the benefits of metering increase as the speed that would prevail in the absence of metering decreases and as the speed flow curve gets flatter the major cost of metering is providing a holding area for vehicles waiting to enter

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

why do cities pay more an empirical examination of some competing theories of the urban wage premium abstract ols regression identifies a 19 percent wage advantage for workers in large urban areas fixed effects estimation suggests that two thirds of this premium can be explained by cities attracting workers of higher unmeasured skills and ability the remaining wage premium is shown to consist of both level and growth elements the wage level effect is consistent with a productivity advantage for firms located in cities the wage growth effect is shown to relate in part to a cumulative advantage in the returns to job mobility for urban workers this last finding highlights the importance of coordination in urban labor markets

understanding gross worker flows across u s states abstract the main cross sectional and time series properties of state level gross and net worker flows wages and rents are characterized using micro data from the u s census a dynamic general equilibrium model of worker migration is introduced to explain the stylized facts in the model a location may experience simultaneous inflows and outflows of workers recent migrants choose to migrate more often than incumbent workers thus locations that attract high numbers of migrants also tend to experience high outflow rates this pattern is a robust feature of the data and cannot be explained by models of net flows only

do low paid workers benefit from the urban escalator evidence from british cities cities are characterised as places of increased human capital accumulation dynamic labour markets and faster wage growth in short places where workers can get ahead studies suggest that urban w

identifying human capital externalities theory with applications the identification of aggregate human capital externalities is still not fully understood the existing mincerian approach confounds positive externalities with wage changes due to a downward sloping demand curve for human capital as a result the mincerian approach yields positive externalities even when wages equal marginal social products we propose an approach that identifies human capital externalities whether or not aggregate demand for human capital slopes downward another advantage of our approach is that it does not require estimates of the individual return to human capital applications to u s cities and states between 1970 and 1990 yield no evidence of significant average schooling externalities copyright 2006 wiley blackwell

the simple dynamics of a debt crisis abstract optimal growth path of an impatient neoclassical economy is studied when creditors impose a credit ceiling to prevent debt repudiation the ceiling becomes binding in finite time when the credit constrained regime begins foreign capital inflows and domestic investment fall abruptly output per capita consumption and real wages gradually decline while the real interest rate rises these results show that debt crises in which high external debt is associated to low growth can occur even in the absence of unanticipated shocks policy mistakes or debt overhang effects if distortionary policies cause impatient behavior the model is consistent with chronic capital flight in the debtor country jel f34 f32

spatial changes in labour market inequality abstract we study spatial changes in labour market inequality for us states and msas using census and american community survey data between 1980 and 2010 we report evidence of significant spatial variations in education employment shares and in the college wage premium for us states and msas and show that the pattern of shifts through time has resulted in increased spatial inequality because relative supply of college versus high school educated workers has risen faster at the spatial level in places with higher initial supply levels we also report a strong persistence and increased inequality of spatial relative demand bigger relative demand increases are observed in more technologically advanced states that have experienced faster increases in r d and computer usage and in states where union decline has been fastest finally we show the increased concentration of more educated workers into particular spatial locations and rising spatial wage inequality are important features of labour market polarization as they have resulted in faster employment growth in high skill occupations but also in a higher demand for low wage workers in low skill occupations overall our spatial analysis complements research findings from labour economics on wage inequality trends and from urban economics on agglomeration effects connected to education and technology

career choice and wage growth in this article i present structural estimates of a search model that flexibly incorporates general human capital accumulation along with career and firm choice where a career is empirically identified as a combination of industry and occupation i use these estimates to empirically distinguish between the relative importance of various factors for generating wage growth over the life cycle evidence presented in the article highlights the importance of considering the two stage search process that originates from the model in particular i demonstrate that previous instrumental variables methods dramatically underestimate the importance of firm specific matches for wage growth

labour market structure and inequality a comparison of italy and the u s markets with rigid labour regulations and centralized wage setting are often thought to be inefficient but egalitarian using a model of off and on the job search and event history individual level data for italy and the u s we show that while the cross sectional wage distributions of young italian males are much more compressed than are the comparable distributions for young white u s males the estimated search model implies that the distribution of lifetime welfare is no more disperse in the u s than it is in italy our model implies that the high frequency of movements between labour market states leads to both a relatively equitable distribution of long run welfare in the u s and a high level of cross sectional inequality