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A Theory of Urban Growth

Duncan Black and Vernon Henderson
Journal of Political Economy
Vol. 107, No. 2 (April 1999), pp. 252-284
DOI: 10.1086/250060
Stable URL: http://www.jstor.org/stable/10.1086/250060
Page Count: 33
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A Theory of Urban Growth
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Abstract

In an economy experiencing endogenous economic growth and exogenous population growth, we explore two main themes: how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization. Localized information spillovers promote agglomeration and human capital accumulation and fosters endogenous growth. Individual city sizes grow with local human capital accumulation and knowledge spillovers; and city with empirical evidence. We analyze whether local governments can successfully internalize local dynamic externalities. In addition, we explore how growth involves real income differences across city types and how urbanization can foster income inequality.

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