The employment share of initially more dense metro areas declined and those of initially less dense metro areas rose. Motivated by this finding, the authors develop a system-of-cities model in which increase in aggregate metropolitan employment causes employment to shift in favor of less dense metro areas because congestion costs increase more rapidly for the initially more dense metro areas. A calibrated version of the model shows that the more-than-twofold increase in employment experienced by MSAs during the postwar period was indeed a powerful force favoring deconcentration.
On the Evolution of the Spatial Distribution of Employment in Postwar United States
WP 97-26 – In this paper, the authors document a pronounced trend toward deconcentration of metropolitan employment during the postwar period in the United States.