Tuesday, February 8, 2011

City size determines wage gap

The graph above tracks the income gap in different sized cities, with 0 representing rural areas and 10 the nation's largest metropolitan regions. As shown, in 1979 (the green line), wage inequality was roughly equal regardless of where workers resided. Not so today. Now, the larger the city, the wider the wage gap among its workers. And these income extremes grew steeper with each successive decade.
Pavan and Baum-Snow did the work. A third of the wage gap is determined by city size, say the researchers. There goes the nostalgia for country living.

Isn't this going to be related to the Hildago study of complexity?
Uh Oh, here is agglomeration again:
These metropolitan areas have created "agglomeration" economies that have augmented productivity in dramatic ways, making workers more valuable and therefore able to command higher pay, says Pavan.
For example, he says, populous regions have been able to support advanced technologies and industries that would be impractical or impossible in smaller communities and rural areas and workers have more opportunities to learn advanced skills and are exposed to innovation more rapidly. As financial centers, larger cities also have easier and cheaper access to capital for bankrolling new ventures. In fact, the study looked at the changing mix of industry in communities of different sizes and found that the industrial composition of large cities, which changed significantly over the three decades, accounted for up to one-third of the urban wage premium.
Looking a the comments in the report above, one commenter points out that poor are just as poor, big city or not. It is the city itself that allows wealthy commerce.  That begs another question, what is it since 1979 that has enhanced higher orders of commerce in the cities?  How about electronic communications.  When I communicate 200 miles, so what, I still have inventory travel time.  But when I communicate over 10 miles, then the inventory is only 20 minutes away.  So my information net work pushes my inventory rates, and I want inventories closer together, less jitter in the transaction sequences.
The jump at size nine are dominated by the largest, Los Angeles, Chicago and NY.  Is it just size or did those cities  jump to higher rank in their supply chains.

We can take these cities and convert them to super growth by automating the transportation grid. Why not?

No comments: