Journal of Economic Perspectives—Volume 12, Number 2—Spring 1998—Pages 139-160 Are Cities Dying? Edward L. Glaeser Is the city dying? Professional seers, such as Richard Naisbitt and Alvin Toffler, have argued that information technology is rapidly making the need for faceto- face contact juid cities obsolete. Experts on the inner city see inevitable urban decay when they note that 16.
7 percent of families in cities with greater than one million inhabitants live below the poverty line (compsired to 10 percent of families across the entire United States) and that the probability of being victimized by crime within a six-month period is 21. percent in a city with more thjui one million inhabitants (compared to 9. 4 percent among cities with less than 10,000 people). ‘ Are they right? Will the 21st century see a decline in urbanization as rapid as the rise in urbanization over the 19th and 20th centuries? Or will breakthroughs in information technology and law enforcement transform the blighted inner city of today into the gentrified polis of tomorrow? Recent trends are not nearly as pessimistic as the prognosticators.Over the past century the rise in U. S.
urbanization has been dramatic, from 39 percent in 1890 to 53 percent in 1940 to 73 percent in 1970 to 75 percent in 1990. The share of the population living in the ten largest metropolitan areas has indeed declined from 23 percent to 21 percent since 1970, but the share of the population living in ‘ The relative poverty figures are taken from the 1994 City and County Data Book; Glaeser and Sacerdote (1996) provide the victimiza...
tion figures. • Edward L.Glaeser is Paul Sack Associate Professor of Political Economy, Harvard University, and Faculty Research Fellow, National Bureau of Economic Research, both in Cambridge, Massachusetts.
140 Joumal of Economic Perspectives metropolitan areas with a population of more than 1 million rose from 41 percent in 1970 to 48,1 percent in 1990. (In general, most of the facts in this paper will stop at 1990, primarily because reliable urbjm population numbers are only available during census years. ) Moreover, there is little eneral correlation between city size and the expected growth of cities or metropolitan areas either in the United States or elsewhere (Glaeser et al. , 1995; Eaton and Eckstein, 1995; Dobkins and Ioannides, 1996), which suggests that there is no inexorable trend towards the decline of bigger cities.
Workers who live in metropolitan areas surrounding a city with more than 500,000 workers earn 10 percent more than workers in metropolitan areas without big cities, and 34 percent more than workers outside metropolitan areas altogether (Glaeser and Mare, 1994) . About 96 percent of new product innovations occur in metropolitan areas, and 45 percent of these new innovations occur in four metropolitan areas: New York, Los Angeles, Boston and San Francisco (Feldmann and Audretsch, 1996). Twenty-five percent of the winners of the national Kennedy Center lifetime achievement awards for contribution to American culture went to people bom in New York Gity. * Actually predicting the future of the city requires a framework for understanding the costs and benefits of urban life.Th
end of the city is only likely if we believe that either the benefits of urbanization are disappearing (as the techno-prophets argue) or that the costs of city life are rising astronomically (as the analysts of the inner city sometimes suggest), This paper will summarize what we know about agglomeration economies and congesting forces in order to assess how changes in these forces will affect the demand for cities.
Conceptually, a city is just a dense agglomeration of people and firms. All of the benefits of cities come ultimately from reduced transport costs for goods, people and ideas.The positive impact of agglomeration that comes from reducing the costs of moving goods lost most of its import2ince over the 20th century as transportation costs fell and large-scale manufacturing declined. The costs of moving people and ideas, however, appear to be as important as ever. The future of the city’s productivity depends on whether available substitutes for face-to-face interactions (e-mail, the internet, and so on) will make the need for personal contact obsolete, or whether the new technologies harbor the dawn of a more interactive era where the ability to contact in person easily is particularly prized.
The costs of cities have historically included health costs, pollution, congestion, crime and social problems. Technological advances have eliminated the health and pollution gaps between cities and other areas. However, longer commuting times in cities are still an important cost, and social troubles such as crime remain among ” While actually measuring price differences on a micro-level is quite hard, it appears that this wage difference roughly compensates workers for higher prices.Nevertheless, as I discuss later, it also must reflect a higher productivity of labor since otherwise, firms would leave, ” Richard Freeman alerted me to this fact and gave me the raw data on which he calculated this figure. Edward L.
Glaeser 141 cities’ biggest problems. Indeed, poorer individuals fleeing cities are most likely to cite crime as their primary reason for flight (Kling, Liebman and Katz, 1996). Of course, the future of cities also depends on what governments do.The federal government appears unlikely to favor cities particularly and, if anything, to continue with policies (like agricultural subsidies) that support low density areas that are disproportionately endowed with U. S. senators.
Local governments are far more crucial to the fate of cities; cities are now being better governed. The quixotic attempts of localities to redistribute income appeju- to have finally ended. A variety of further policy changes (particularly school vouchers) could probably do much to save decaying urban areas.The ultimate prognosis for cities depends on whether the changes in the benefits accruing to cities from informational spillovers and the division of labor will be greater than the changes in the congestion and social costs of cities. I beheve that the death of the city is far from imminent.
The demand for interaction is certainly rising and face-to-face interaction is not close to being supplanted by its electronic competitors. Few of the costs of urban life appear to be rising too dramatically.However, unless particular policy choices are implemented, it appears likely that many older cities will
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