Working Paper: CEPR ID: DP2376
Authors: Gilles Duranton; Diego Puga
Abstract: Why are some cities specialized and others diversified? What are the advantages and disadvantages of urban specialization and diversity? To what extent does the structure of cities, and the activities of firms and people in them, change over time? How does the sectoral composition of cities influence their evolution? To answer these and related questions, we first distil some key stylized facts from the empirical literature on cities and the composition of their activities. We then turn to a review of different theories looking at such issues and study the extent to which these theories contribute to the understanding of the empirical regularities.
Keywords: cities; diversity; specialisation; innovation; learning; lifecycle
JEL Codes: D83; O31; R30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| urban diversity (R23) | innovation (O35) |
| innovation (O35) | ideal production process (L23) |
| ideal production process (L23) | relocation to specialized cities (R23) |
| relocation to specialized cities (R23) | lower production costs (D24) |
| urban diversity (R23) | relocation to specialized cities (R23) |
| specialization (Z00) | production efficiency (D24) |