The New Geography of Jobs, by Enrico Moretti

Abstract

ONLINE AND IN PRINT. "The central problem of local economic development, namely, how to guide declining cities toward renewed prosperity, remains stubbornly resistant to resolution, both theoretically and in practice. Despite a long history of theory and empirical research going back to the economic base model of the 1950s, and an even longer history of practice, dating to the 19th century, cities and states in the U.S. are still chasing jobs, industrial plants, and football teams, offering huge subsidies. They are bemused by nostrums, such as the creative class, which promise success, but rarely deliver. On the academic side, much excellent research has been done, for example on industrial clusters, and many books have set out the principal tools for local economic development that planners have employed. Still, success eludes most of the places that really need it. Addressing this dilemma, Enrico Moretti has written an important book that every student of local economic development should read. Moretti is a labor and urban economist, with both the strengths and weaknesses that often accompany economists' ventures into the urban world; but he goes beyond others, attempting no less than a coherent explanation of the current state of the economic welfare of cities in the U.S. His perspective is dynamic, placing the present situation in the context of the evolution of industrial production and labor markets over the past 50 years. The great change during that time has been the loss of industrial manufacturing production employment in the U.S., which was identified early on by planners facing the consequences of decline in cities such as Detroit and Cleveland, as globalizing foreign competition destroyed them. That is a familiar story, as is the rapid population growth of cities in the Sun Belt, together with the rise of electronics and information-based sectors in iconic places, such as Silicon Valley, and growing inequality nationally. However, Moretti argues that these shifts have brought about a second type of increasing inequality, namely that between places. Those cities that have the new innovative sectors have surged ahead, not only of the centers of industrial decline, but also of most other cities, and the gap is widening. The implications for local economic development are very serious."