Measuring Urban Agglomeration A Refoundation of t

Authors: Andre Lemelin Fernando RubieraMorollón Ana GómezLoscos

Publish Date: 2014/12/12

Volume: 125, Issue: 2, Pages: 589-612

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Abstract

In this paper we put forth the view that the potential for urbanization economies increases with interaction opportunities From that premise follow three fundamental properties that an agglomeration index should possess 1 to increase with the concentration of population and conform to the Pigou–Dalton transfer principle 2 to increase with the absolute size of constituent population interaction zones and 3 to be consistent in aggregation Limiting our attention to pairwise interactions and invoking the spaceanalytic foundations of local labor market area LLMA delineation we develop an index of agglomeration based on the number of interaction opportunities per capita in a geographical area This leads to Arriaga’s mean citypopulation size which is the mathematical expectation of the size of the LLMA in which a randomly chosen individual lives The index has other important properties It does not require an arbitrary population threshold to separate urban from nonurban areas It is easily adapted to situations where an LLMA lies partly outside the geographical area for which agglomeration is measured Finally it can be satisfactorily approximated when data is truncated or aggregated into sizeclasses We apply the index to the Spanish NUTS III regions and evaluate its performance by examining its correlation with the location quotients of several knowledge intensive business services known to be highly sensitive to urbanization economies The Arriaga index’s correlations are clearly stronger than those of either the classical degree of urbanization or the Hirshman–Herfindahl concentration indexA key property of the index is that it correctly reflects the change in the potential for interactions and urbanization economies of any reallocation of population This property is close to the Pigou–Dalton transfer principle for measures of inequality which states that any change in the distribution that unambiguously reduces inequality must be reflected in a decrease in its measure

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