Brookings Article on Metro Areas

According to Bruce Katz, Mark Munro and Jennifer Bradley, authors of this article from the Brooking Institution, the health of the largest metro areas matters more than the health of the 50 state economies. The authors say it is cities that are creating jobs, innovations, and prosperity. This has implication for policy at the federal level.

We should be spending money on metropolitan infrastructure, such as new transit lines or the maintenance and upgrade of existing roads and bridges, because it gives the best return on investment, the most bang for the buck. And yet the federal government sends the overwhelming bulk of national infrastructure funds to states, not metros. Given the vagaries of state politics, state departments of transportation in turn tend to scant metro investments in favor of building brand-new roads in far-flung places. Money that could be fueling the metro economic engine ends up widening a rural highway.

But—critically—metros are more than the sum of their parts. When they function at their highest pitch, metros epitomize the special “multiplier” value of concentration, clustering, and agglomeration in economic life, a value celebrated over the centuries by economists such as Adam Smith, Alfred Marshall, and Paul Krugman. The gains are manifold. Thanks to the cost-effective sharing of fixed resources in relatively dense locations, infrastructure investments yield markedly higher payoffs in metropolitan areas than in non-metro areas, or in the old hub-and-spoke, urban/suburban model. Metropolitan density yields invention: Patenting rates rise markedly with increased employment density, such as is provided by metropolitan areas. Metro areas also accelerate residents’ wage growth, because they promote learning, help match people to jobs and people to people. Economists Edward Glaeser and David Maré found that workers in large metro areas earn a 33 percent wage premium, that the premium accrues to them over time, and that it stays with them when they leave the area. Metro areas themselves seem to speed the accumulation of human capital.

And finally, metropolitan land-use and placemaking bring special advantages. More compact development patterns preserve rural lands and valuable ecosystems that rapid suburbanization might otherwise consume. Likewise, such development expands transportation options and generates fewer vehicle miles and associated greenhouse gas emissions. One result: U.S. metro-area residents— frequently supported by public transit and greater residential densities—have smaller per capita carbon footprints than the average American.