A tale of two cities: Communication, innovation, and divergence

Abstract

We present a two‐area endogenous growth model where abstract knowledge flows at no cost across space but tacit knowledge arises from the interaction among researchers and is hampered by distance. Digital communication reduces this “cost of distance” and reinforces productive specialization, leading to an increase in the system‐wide growth rate but at the cost of more inequality within and across areas. These results are consistent with evidences on the rise in the concentration of innovative activities, income inequality, and skills and income divergence across US urban areas.

A Tale of Two Cities: Communication, Innovation, and Divergence

“…The data that support the findings of this study are openly available in openICPSR at https://doi.org/10.3886/ E192071V2, reference number E192071V2 (Magrini & Spiganti, 2023). These data were derived from the following resources available in the public domain: CENSUS, https://www2.census.gov/prod2/statcomp/usac/excel/LND01.xls, https://www.census.gov/geographies/mapping-files/time-series/geo/cartographic-boundary.html, and https://www.ce nsus.gov/geographies/mapping-files/time-series/geo/carto-boundary-file.html; IPUMS, https://usa.ipums.org/usa-action/variables/group; NHGIS, https://www.nhgis.org/; USDA, https://www.ers.usda.gov/data-products/natural-amenities-scale/; USPTO, https://patentsview.org/download/data-download-tables.…”