Will Workers Disperse From Cities?

I love the passage in part because it starts of in the first paragraph talking about how dense central business districts "represent the power and prestige of information-work organizations," which makes it sound as if downtown urban areas are nothing but an ego trip for top executives, but then ends with some comments about how economic factors "labor and capital markets" actually end up shaping the results. 

The economic patterns of big cities have changed. I have discussed "How Cities Stopped Being Ladders of Opportunity" (January 19, 2021), because in recent decades they have been places where the more-educated could earn higher wages, but they have stopped being places where the less-educated could earn higher wages. 

But moreover, when Mitchell in his 1995 book referred to "the need for face-to-face contact with coworkers and clients," he was seeing only part of the picture. Yes, contact with coworkers and clients within a firm matter, but it's also true that firms of a certain type often bunch together geographically. It seems important to be geographically located near workers and clients from other firms, too. I've written a bit about this "economics of density," and offer some links, in "Cities as Economic Engines: Is Lower Density in Our Future" (August 14, 2020). 


Hannah Rubinton offers another piece of evidence in "Business Dynamism and City Size" (Economic Synopses: Federal Reserve Bank of St. Louis, 2021, Number 4). The points represent data for individual cities. The horizontal axis shows the population of the city. The vertical axis of the top panel shows the "establishment entry rate," which is the rate at which new business establishments are started in a city. An "establishment" includes both a new business or a new location for part of an existing firm. In the bottom panel, the vertical axis shows the "establishment exit rate." The payoff for these figures is that if you plot the data for 1982, you can that larger cities tended to have lower rates of entry and exit (the solid lines slope down), but by 2018 the larger cities tended to have higher rates of entry and exit (the dashed lines slope up.)

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