What attracts people and employers to some cities but not others ?

Economies of agglomeration

agglomerationeconomiesA:Economies of agglomeration

Prof. Moretti in his book ‘Geography of Jobs’  identifies three things,  that economists collectively refer to as the forces of agglomeration, as driving factors.

One is the size and thickness of the specific labor markets. Thick markets allow workers and employers to make better and better informed and longer lasting employer matches.

Two is the ecosystem. Effectively, Moretti shows how the soil that we are planted with our employers is a huge contributor to our individual success. For instance he resents several interesting examples that show how both smart and not-so smart people benefit from being around smart people.

The number of cited patents example is particularly interesting and telling. He also makes it clear that having access to funding is made easier when the cities’ ecosystem is better developed.

Three are knowledge spilling overs.

 

Published by

Dwight Steward, Ph.D.

Dr. Steward regularly writes and speaks on topics involving business and individual economic damages, employment audits, and the analysis of payroll and time data in wage and hour investigations. Dr. Steward has also held teaching positions at The University of Texas-Austin in the Department of Economics and in the Red McCombs School of Business, The College of Business at Sam Houston State University, and at The University of Iowa. He has taught numerous courses in statistics, corporate finance, labor economics, business policies, managerial economics, and microeconomics.