Bigger Cities Boost Productivity, but Only Up to a Point
Urbanization economies in manufacturing industries were studied using data from China. The researchers looked at how city size and industrial diversity affect firm productivity. They found that productivity increases with city size, but the effect diminishes in cities with over two million people. Firms also benefit from industrial diversity, with larger cities providing stronger benefits. However, the benefit decreases as firm size increases. This study sheds light on how different factors impact productivity in urban areas.