Learning investment and industrial diversity in urban growth

Abstract

This paper studies an urban growth model where learning through personal contacts could be more effective in a denser locale, whereas the effectiveness of learning through impersonal means of communications depends principally on the technology of communications rather than on the locale in which learning takes place. As a result of advances in communications technology, cities would be larger, and workers would spent more time on learning through personal contacts but may cut time on impersonal learning if the two kinds of learning investment are complements. Otherwise, cities could become smaller, while workers would spend more time on impersonal learning at the expense of time on learning through personal contacts. In a multi-sector economy, urban industrial diversity tends to increase or fall together with city size. © 2007 Elsevier Inc. All rights reserved.