In fact, most economists believe that in the absence of agglomeration economies, the spatial distribution of employment would be much more even. In this article, Satyajit Chatterjee discusses his research, which questions this belief. He finds that while agglomeration economies are an important factor, they’re not the most important one. The combined effects of factors unrelated to agglomeration economies, such as the availability of natural resources and local economic policies, appear to account for the bulk of the spatial concentration of U.S. employment.

This article appeared in the Fourth Quarter 2003 edition of Business Review.

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