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The impact and optimization of the urban industrial mix


The industrial mix is a relevant issue facing urban economies as the modern economy transitions from an industrial to a post-industrial service-based. The first essay estimates the changes and effects of density that result from relative variations in urban industrial composition. This essay demonstrates that identical increases in aggregate metropolitan employment originating from growth in individual productive sectors result in different average urban density measures. The results suggest that certain urban characteristics are important in determining density's relationship to productivity and that city finances are strained as cities lose manufacturing and gain service sectors.
The second essay estimates the impact of the industrial mix from a land use perspective and evaluates the optimal combination of sectors for a proposed development project using a range of efficiency variables. The results provide a number of insights for policy makers. First, high-wage services yield the largest increase of population and household income whereas retail's modest indirect effects make it attractive to areas with limited available land. Second, sectors have unique land requirements that can be used to derive optimal zoning policies. Third, the results reveal sector growth complements: sectors that interact with each other to increase efficiency measures. Finally, the results demonstrate that if manufacturing is unavailable, export growth in retail or tourism can substitute.
The third essay analyzes the industrial mix in the context of optimal city size. Unlike previous work on optimal city size that use real externalities to derive optimal size, this paper estimates optimal city size with pecuniary externalities that is made possible due to the inefficiency of an unequal distribution of land and capital rent to households inside the city. The essay is able to determine the degree of overpopulation and estimate the shifts of the inverted U due to changes in the industrial mix. The results show that a relative increase in export growth for services leads to a larger city size, whereas total factor productivity growth in manufacturing sector lead to a larger optimal city size.


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city size
industrial mix
land use
urban economy
urban planning


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