By Ryan McGreal
Published April 13, 2010
Harvard economist Edward L. Glaeser explores the purpose of cities in his latest NY Times column, titled, "Why Humanity Loves, and Needs, Cities":
Given the vastness of the globe, why do human beings choose to live so close to one another?
Understanding the appeal of proximity - the economic advantages of agglomeration - helps make sense of the past and future of cities. If people still clustered together primarily to reduce the costs of moving manufactured goods, then cities would become increasingly irrelevant as transportation costs continue to decline.
If cities serve, as I believe, primarily, to connect people and enable them to learn from one another, than an increasingly information-intensive economy will only make urban density more valuable.
He notes a recent study by the National Bureau of Economic Research (NBER) on the economics of clustering that concluded both incomes and productivity correlate positively with density.
Teasing out the flow of causality is challenging, but the two seem to reinforce each other: more productive people tend to move to cities where there are more opportunities; while at the same time, cities are more effective at spreading and sharing the knowledge that allows people to increase their productivity.
What this means is that as knowledge become more and more important to our economy, the urban characteristics of density, proximity and contact will become more and more essential to economic growth.
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