We develop an urban growth model where human capital spillovers foster entrepreneurship and learning in heterogenous cities. Incumbent residents limit city expansion through planning regulations so that commuting and housing costs do not outweigh productivity gains. The model builds on strong micro-foundations, matches key regularities at the city and economywide levels, and generates novel predictions for which we provide evidence. It can be quantified relying on few parameters, provides a basis to estimate the main ones, and remains transparent regarding its mechanisms. We examine various counterfactuals to assess quantitatively the effect of cities on economic growth and aggregate income.

Gilles Duranton  is professor of real estate and holds the Dean’s Chair in Real Estate. He joined Wharton in 2012 after holding academic positions at the University of Toronto and the London School of Economics. A graduate from HEC Paris and Sorbonne University, he obtained his PhD in economics from the London School of Economics and the Ecole des Hautes Etudes en Sciences Sociales in Paris. His current work focuses land use and urban growth in emerging cities, the measurement of urban transportation and congestion, land development, and the geography of innovation and technology. He is also interested in the evaluation of the effects of infrastructure and place-based policies. He serves as a co-editor for the Journal of Urban Economics and sits on the editorial board of several other academic journals. He is a fellow of the National Bureau of Economic Research and of the Centre for Economic Policy Research. He regularly works as consultant on regional and urban policy for national governments and international organisations. He was also the 2011 president of the North American Regional Science Association, the 2016-2017 president of the Urban Economics Association, and the 2013-2019 the chair of the Wharton Real Estate Department.