Brookings-Wharton Papers on Urban Affairs 2000 (2000) 39-47
[A Thematic History of Urban Economic Analysis]
Dennis Epple: When I was a Ph.D. student at Princeton University, the two faculty members whose work I found most exciting were Edwin Mills and Wallace Oates. It is an honor to share this forum with them.
Writing a history of urban economic analysis would be a daunting task for most of us, but Mills handles it with evident ease. He organizes research in urban economics into nine subject areas. It is an appealing classification that begins with the topic that unifies the field: spatial analysis. It includes eight other topics that divide urban research into relatively distinct subject areas: housing; government sector; labor, poverty, race; crime; transportation; education; interurban, rural-urban; and developing countries. The paper goes on to provide a concise summary of research efforts to date and highlights key remaining issues for research.
I like the paper very much. It not only provides a summary of the state of research, but also offers opinions about the issues within the research, pointing out where Mills thinks work is on target and, in some cases, where he thinks it is wrongheaded. The author has also been extremely modest in this history of research in urban economics, understating the central role that he has played in the field through his tremendous research contributions, his text, his role in founding and editing the Journal of Urban Economics, and his influence on his students and on virtually everyone else who has worked in the field. The editors of these new Brookings-Wharton Papers on Urban Affairs chose well in giving Mills the leadoff role to initiate the journal.
It might be helpful if I highlight some of the open research issues raised in the paper. The review begins with fundamental questions for the field of urban economics.
Why do urban areas exist? What is the reason for the measured increase in total factor productivity as urban areas increase in size? Mills's answer to the first question is that proximity economizes on the costs of moving goods, people, and messages. His conjecture regarding the second is that unpriced and [End Page 39] unmeasured inputs are the source of measured increases in total factor productivity as urban areas grow. The paper emphasizes in particular time spent in commuting and other business travel. This conjecture strikes me as providing a valuable focus for researchers looking to pin down the elusive sources of economies in urban areas. Mills also takes some stands about things that are probably not the source of increasing factor productivity, and he highlights key issues for this area, such as the importance of distinguishing between external economies and economies internal to firms.
The paper considers another question central to urban economics: What determines the size distribution of cities? Mills cites evidence of the pervasiveness of the rank-size rule within various countries and across countries for long periods of time. I find this particularly compelling because I know that Mills reads this literature with a skeptical eye. Indeed, I recall that some time ago he made the point that if you have two countries where the rank-size rule holds, then it cannot hold if the data for two countries are combined. The fact that this relationship is so robust over time and across countries makes it a central regularity that, as Mills says, cries out for explanation.
Regarding issues related to location within metropolitan areas and to the zoning activities of local governments, Mills takes to task those of us who neglect land-use controls in modeling household-location choices and local government tax and expenditure policies. He conjectures that land-use controls represent a massive breakdown of the median-voter process because residences and businesses near a disputed property have disproportionate influence on land-use controls for the property. He also expresses the view that the outcomes that result are often not the outcomes that are best when viewed from the perspective of the larger interests of the community. I wish I could say that...