DP16794 Cities and Technological Waves

Author(s): Enrico Berkes, Ruben Gaetani, Martí Mestieri
Publication Date: December 2021
Keyword(s): cities, Innovation, patents, population growth, technology diffusion
JEL(s): O10, O30, O33, O47, R12
Programme Areas: International Trade and Regional Economics, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16794

We develop a spatial model of economic growth to study the effect of changes in the technological landscape on the spatial distribution of economic activity. We use this framework to study the evolution of the U.S. economic geography over the twentieth century. In the model, innovation via frictional idea diffusion makes cities trajectories sensitive to "technological waves," defined as long-term shifts in the importance of different knowledge fields. We calibrate the model using a new dataset of historical geolocated patents, and find that cities differential exposure to technological waves explains between 15% and 20% of the variation in local population growth over the twentieth century. Counterfactual experiments suggest large and heterogeneous geographical effects of future technological scenarios.