The Making of the Modern Metropolis: Evidence from London*

Abstract

Using newly constructed spatially disaggregated data for London from 1801 to 1921, we show that the invention of the steam railway led to the first large-scale separation of workplace and residence. We show that a class of quantitative urban models is remarkably successful in explaining this reorganization of economic activity. We structurally estimate one of the models in this class and find substantial agglomeration forces in both production and residence. In counterfactuals, we find that removing the whole railway network reduces the population and the value of land and buildings in London by up to 51.5% and 53.3% respectively, and decreases net commuting into the historical center of London by more than 300,000 workers.

Urbanization in the Developing World: Too Early or Too Slow?

“…Poor countries cannot afford the ideal investments required to deal with the negative externalities of dense cities and are always playing a game of catch-up with rapid industrialization. Clustering of employment requires expensive transportation infrastructure to allow large numbers of workers to reach firms in city centers or peripheral industrial and commercial zones as well as to allow firms to get their goods to markets (Fujita and Ogawa 1982;Heblich, Redding, and Sturm 2018;Akbar et al 2018;Tsivanidis 2019). The sewer systems and safe water supplies required to improve health and reduce mortality from disease (Kappner 2019) at high population densities are also expensive.…”

Urban Transport Expansions and Changes in the Spatial Structure of U.S. Cities: Implications for Productivity and Welfare

“…Related papers use plausibly exogenous variation in firm location incentives to recover information about agglomeration economies in specific settings such as the siting of new, large, industrial plants (Greenstone, Hornbeck, & Moretti, 2010) and the rise and fall of the Berlin Wall (Ahlfeldt et al, 2015). A different literature, including Baum-Snow (2007a), Duranton and Turner (2012), Allen andArkolakis (2014), andHeblich et al (2018), examines how transport infrastructure influences the spatial distribution of population within and between cities and evaluates the social rate of return to interregional highways.…”

Transportation Infrastructure in the US

“…A number of other papers find qualitatively similar results about highways, e.g., Baum-Snow (2019), Baum-Snow, Brandt, Henderson, Turner, and Zhang (2017) or Garcia-López, Holl, and Viladecans-Marsal (2015). A smaller literature finds qualitatively similar effects for public transit, e.g., Gonzalez-Navarro and Turner (2018), Heblich, Redding, and Sturm (2018) or Tsivanidis (2019). To sum up, the empirical evidence is as clear as could be hoped: as transportation infrastructure reduces transportation costs, people and (usually) economic activity spread out.…”