Evidence for localization and urbanization economies in urban scaling

Abstract

We study the scaling of (i) numbers of workers and aggregate incomes by occupational categories against city size, and (ii) total incomes against numbers of workers in different occupations, across the functional metropolitan areas of Australia and the US. The number of workers and aggregate incomes in specific high income knowledge economy related occupations and industries show increasing returns to scale by city size, showing that localization economies within particular industries account for superlinear effects. However, when total urban area incomes and/or Gross Domestic Products are regressed using a generalised Cobb-Douglas function against the number of workers in different occupations as labour inputs, constant returns to scale in productivity against city size are observed. This implies that the urbanization economies at the whole city level show linear scaling or constant returns to scale. Furthermore, industrial and occupational organisations, not population size, largely explain the observed productivity variable. The results show that some very specific industries and occupations contribute to the observed overall superlinearity. The findings suggest that it is not just size but also that it is the diversity of specific intra-city organization of economic and social activity and physical infrastructure that should be used to understand urban scaling behaviors.

Estimating the drivers of urban economic complexity and their connection to economic performance

“…But another interpretation is that measures like population size (or industrial diversity) alone do not take into account the specific combinations of people and technology in a city that can increase (or decrease) the potential for capability recombination. This is consistent with the findings by Balland & Rigby [19], for example, who found that high-complexity patenting tends to be geographically concentrated, yet not exclusively in the most populous cities; or by Sarkar et al [104], who found that to understand urban economic performance the specific intra-city composition of economic and social activity and physical infrastructure should be taken into account, in addition to just population size. This suggests that our estimate of city collective know-how may capture such intra-city composition.…”

On the relation between transversal and longitudinal scaling in cities

“…According to this proposition, in the long term, the general performance of a particular city would be largely independent of individual political choices. However, the universality proposition has been challenged, either by counter-evidence [10,28,[35][36][37], or by methodological arguments [38][39][40][41][42]. Thus, the universality proposition is still an open question both from the methodological and the theoretical point of views.…”

Measuring neighbourhood change through residential mobility and employment

“…After all, the total employment patterns could be quite dispersed, with a major portion of jobs scattered throughout the metropolitan areas rather than being concentrated in the centres. However, the PECs are still dominant as they attract, relatively, the highest proportion of workers-especially in knowledge-based and skillsbased professional occupational categories that generate the highest incomes (Sarkar et al, 2020).…”