Dec 5, 2012
Emily McMackin
Emily McMackin
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Cutting to the Core: The Economics of Densely Populated Cities

Education: Raleigh NC

Are cities with densely populated cores more progressive than others? Yes, says Richard Florida in a recent post on The Atlantic Cities blog. The close clustering of people together near the center of a city or metro area is connected to better energy efficiency, greater innovation and productivity, and higher levels of skill, talent, income and economic wealth, Florida asserts.

To quantify the role of density on regional economic development, Florida compares “population-weighted” density, a U.S. Census calculation based on the distribution of people within and across cities and metro areas, with variables ranging from regional income, wages and economic output to percentage of college graduates, knowledge workers and high-tech industries to housing prices and commuting patterns.

Using this scale, metros with people and economic activity centered around their city cores show better performance and growth than those that simply rank high according to people per square mile. Densely concentrated metros, which tend to be larger, also show higher income, wages and economic output per person. Other areas where these cities rank high include:

Talent. Aligning with the philosophy that talented, ambitious people spur each other’s productivity, cities with densely populated cores showed a larger share of college graduates and professional workers in knowledge- and creative-based fields. Working class jobs and physical skills were less common, while cognitive and social intelligence skills — both of which underpin knowledge work — were more prevalent around dense city cores.

Diversity, technological skill. Just as arts, media, entertainment and business management occupations are more common in metros with densely concentrated cores, so are STEM (science, technology, engineering and math) jobs. High-tech industry and workers with diverse backgrounds are also easier to find in these locations.

Housing, transportation value. Both median housing prices and the share of income people devote to housing are higher in densely populated city cores, partly due to higher incomes and wages that these cities offer, but also due to a greater demand for living closer to downtown areas and restrictions that keep housing in short supply. Densely concentrated cities also have more bike commuters and people who take advantage of carpools or public transit.

City cores like these are increasingly driving economic growth and wealth across the country, says Florida, who described a future economy driven by megaregions with economic and entrepreneurial activity radiating from the center of cities during a speech at the recent International Economic Development Council conference.

“To stay competitive …. we have to build denser, more integrated, stronger, more connected communities,” Florida told conference attendees.

What do you think about Florida’s view of population-weighted density and economic prosperity? Do you agree that it plays a major role in economic development and growth? Why or why not? Please share your thoughts below.

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