Economies of agglomeration

agglomerationeconomiesA:Economies of agglomeration

Prof. Moretti in his book ‘Geography of Jobs’  identifies three things,  that economists collectively refer to as the forces of agglomeration, as driving factors.

One is the size and thickness of the specific labor markets. Thick markets allow workers and employers to make better and better informed and longer lasting employer matches.

Two is the ecosystem. Effectively, Moretti shows how the soil that we are planted with our employers is a huge contributor to our individual success. For instance he resents several interesting examples that show how both smart and not-so smart people benefit from being around smart people.

The number of cited patents example is particularly interesting and telling. He also makes it clear that having access to funding is made easier when the cities’ ecosystem is better developed.

Three are knowledge spilling overs.