Oliver Hartwich: To save our cities, ask urban economists

Last week, I wrote about why New Zealand’s cities are shrinking – and why that is a cause of concern.

Cities have always been engines of prosperity. Bringing people together makes them more productive. Economists refer to this phenomenon as ‘agglomeration effects’.

In a classic 1994 paper, Ed Glaeser found that urban workers earn a third more than their rural counterparts. The reason? City workers learn from one another and thereby improve their abilities. In economic parlance, cities promote the accumulation of human capital.