Survival of the Fittest in Cities: Urbanisation and Inequality

By Kristian Behrens, Frédéric Robert-Nicoud. Economic Journal, 2014

126 citations recorded by the source corpus.

We develop a framework that integrates natural advantage, agglomeration economies, and firm selection to explain why large cities are both more productive and more unequal than small towns. Our model highlights interesting complementarities among those factors and it matches a number of key stylised facts about cities. A larger city size increases productivity via a selection process, and higher urban productivity provides incentives for rural-urban migration. Tougher selection increases both the returns to skills and earnings inequality in cities. We numerically illustrate a multi-city version of the model and explore the formation of new cities, the growth of existing cities, and changes in income inequality.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/6b9c4350685ac1f39fe6d8dc0bfd2d784e6c2fea

Citations in the corpus

• Agglomeration Effects in Colombia (2016, unknown): “This is to be expected given the much high college premium in Colombia and the fact that Behrens et al. (2014) use aggregate data.”