Complex Economic Activities Concentrate in Large Cities

TL;DR

This paper investigates why complex economic activities tend to concentrate in large cities and finds that this trend has been increasing since 1850, likely due to the growing complexity of the economy.

Contribution

It provides empirical evidence that complex economic activities are more concentrated in large cities and that this concentration has been increasing over time since 1850.

Findings

Complex activities are more concentrated in large cities.

Urban concentration of complex activities has increased since 1850.

The growth in complexity of the economy drives urban concentration.

Abstract

Why do some economic activities agglomerate more than others? And, why does the agglomeration of some economic activities continue to increase despite recent developments in communication and transportation technologies? In this paper, we present evidence that complex economic activities concentrate more in large cities. We find this to be true for technologies, scientific publications, industries, and occupations. Using historical patent data, we show that the urban concentration of complex economic activities has been continuously increasing since 1850. These findings suggest that the increasing urban concentration of jobs and innovation might be a consequence of the growing complexity of the economy.