Working Paper: CEPR ID: DP9590
Authors: Gilles Duranton; Diego Puga
Abstract: Why do cities grow in population, surface area, and income per person? Which cities grow faster and why? To these questions, the urban growth literature has offered a variety of answers. Within an integrated framework, this chapter reviews key theories with implications for urban growth. It then relates these theories to empirical evidence on the main drivers of city growth, drawn primarily from the United States and other developed countries. Consistent with the monocentric city model, fewer roads and restrictions on housing supply hinder urban growth. The fact that housing is durable also has important effects on the evolution of cities. In recent decades, cities with better amenities have grown faster. Agglomeration economies and human capital are also important drivers of city growth. Although more human capital, smaller firms, and a greater diversity in production foster urban growth, the exact channels through which those effects percolate are not clearly identified. Finally, shocks also determine the fate of cities. Structural changes affecting the broader economy have left a big footprint on the urban landscape. Small city-specific shocks also appear to matter, consistent with the recent wave of random growth models.
Keywords: agglomeration economies; amenities; land use; transportation; urban growth
JEL Codes: C52; D24; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Agglomeration economies (R11) | Urban growth (R11) |
| Human capital (J24) | Urban growth (R11) |
| Housing supply restrictions (R31) | Urban growth (R11) |
| Durability of housing (R21) | Response of cities to economic shocks (R11) |
| Improvements in transportation infrastructure (R42) | Increased employment in cities (R23) |
| Transportation costs (L91) | Urban growth (R11) |
| Reduction in commuting costs (R48) | Increase in city population (R23) |