- 2073-7009 (online)
Working papers from the Regional Development Policy Division of the OECD cover a full range of topics including regional statistics and analysis, urban governance and economics, rural governance and economics, and multi-level governance. Depending on the programme of work, the papers can cover specific topics such as regional innovation and networks, the determinants of regional growth or fiscal consolidation at the sub-national level.
What Makes Cities More Productive? Evidence on the Role of Urban Governance from Five OECD Countries
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- Rudiger Ahrend1, Emily Farchy1, Ioannis Kaplanis1, Alexander C. Lembcke1
- Author Affiliations
- 1: OECD, France
- 16 May 2014
- Bibliographic information
This paper estimates agglomeration benefits based on city productivity differentials across five OECD countries (Germany, Mexico, Spain, United Kingdom, and United States). It highlights the relationship between cities’ governmental fragmentation and productivity, and represents the first empirical analysis of how metropolitan governance structures affect this relationship. The comparability of results in a multi-country setting is supported through the use of Functional Urban Areas – an internationally harmonised definition of cities based on economic linkages rather than administrative boundaries. In line with the previous literature, the analysis confirms that city productivity tends to increase with city size; doubling city size is found to be associated with an increase in productivity of between two and five percent. What is more, city productivity is positively associated with the population size of nearby cities. On the governance side, the paper finds that cities with fragmented governance structures tend to have lower levels of productivity. For a given population size, a metropolitan area with twice the number of municipalities is associated with around six percent lower productivity; an effect that is mitigated by almost half by the existence of a governance body at the metropolitan level.
- agglomeration economies, productivity, governance, cities
- JEL Classification:
- H73: Public Economics / State and Local Government; Intergovernmental Relations / Interjurisdictional Differentials and Their Effects
- R12: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Size and Spatial Distributions of Regional Economic Activity
- R23: Urban, Rural, Regional, Real Estate, and Transportation Economics / Household Analysis / Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R50: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis / General