Staff involved: Gabriel Ahlfeldt and Christian Hilber
One of the arguably most striking features of the contemporary economic geography of the world is the uneven distribution of economic activity. Across the globe, economic wealth is evidently concentrated in relatively few countries. Within countries, there are typically cities and regions that thrive at the expense of others. The largest spatial differentials, however, can be found within cities. As an example, the City of London attracts more than 300 thousand commuters per day and hosts more than 500 bank offices and several global headquarters on just about one square mile. The City produces 2.4% of UK GDP and about 25% of Greater London GDP, a dense urban area of about 1500 times the size of the City. The strength of such ultra-dense clusters of economic activity, which we refer to as prime locations, illustrates that despite decreasing transport and communication costs the economic benefits of spatial density are hardly substitutable.
In this project we analyse the internal structure of a large sample of cites around the world. We identify the contemporary prime locations within these cities and investigate how the spatial structure of cities is organized around these focal points of economic activity. We analyse the locational characteristics of prime locations and compare them to historic city centres, which we trace back to the first settlements, often several thousands of years ago. At the heart of our analysis, we analyse factors, which determine the degree of persistency in internal city structure to rationalize the variety of observed spatial outcomes. Concretely, we analyse the extent to which major shocks shift the internal structure between multiple equilibria and how the mutually reinforcing effects of productivity and density lead to path-dependency in the internal structure of cities.