Urban Diversity and Economic Growth

Urban Economics
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Why Cities Exist
Urban diversity and economic growth.
Upon examining the ‘Urban Diversity and Economic Growth by John M. Quigley, quite informative insights were observed. I agree that traditionally cities have emerged to have a concentrated population at the Central Business District. Therefore, human capital factors of production are concentrated at the center in order to maintain the cost of transportation and flow of information at low levels. Additionally, land at the CBD is at the highest values because of the immediate availability of the factors of production. As we drift away from the city CBD the cost of housing and land prices begin to decline. The city outskirts have big land sizes, longer commute times, and poverty levels decrease.
The model above is closely supported by Jan K. Brueckner's theories in “Why Cities Exist ."Brueckner is convincing that cities exist due to two main forces; scale economies and agglomeration economies. Social economies arise when business becomes more efficient to a large scale of operation and can produce more output per unit of input. As a result, workers are more willing to locate near the businesses, resulting in "company towns ."With the increased settlement, the 'company towns' will require more auxiliary services such as hospitals, shopping centers, and banking.
On the other hand, agglomerate economies have monetary effects on transport costs. Savings arise when markets and suppliers are closely located to each other. Similarly, employees tend to benefit from each other through co-working and interactions with other employees from different companies. Hence, knowledge transfer becomes easy and beneficial to companies in the vicinity.
However, the traditional view of urban areas has been challenged by decentralization. New York is still one of the few cities with a concentrated urban population. More cities have become decentralized; for instance, Los Angeles and Chicago have most employment opportunities located away from the CBD. Many workers are relocating to the suburbs forcing companies to relocate to residential areas.
Furthermore, the suburbs offer better access routes for transportation. As a result, companies are relocating suburbs where they can be closer to their workers and have less congested routes for transportation. Besides, manufacturing companies needs more space for operations that can only be found in the suburbs. Thus, the classical empirical evidence about urban economies may no longer be valid.
City Size
Why is New York America’s Largest City
Edward L. Glaeser demonstrates a deeper understanding of the growth of New York City and makes strong points on why it is America’s largest city. I agree with most of his arguments as they draw parallels with other big cities worldwide. First, as mentioned earlier, agglomeration economics play a huge role in the growth of urban areas. New York is no different; its geographical location made it an ideal place for a strategic harbor that led to the development of the biggest port in America. Agglomeration economies resulting from large-scale economies from the shipping industry coupled with specializati...