Structural change, urban congestion, and the end of growth

Arbeitspapier

This paper develops a two-sector R&D-based growth model with congestion effects from increasing urban population density. We show that endogenous technological progress causes structural change if there are positive productivity spillovers from the modern to the traditional sector and Engel's law holds. In turn, urban congestion effects cause a productivity slowdown in the modern sector. Eventually, economic growth may cease in the long-run. We also show that land dilution from a higher workforce may give rise to negative scale effects on GDP per capita. Finally, we investigate how the optimal land allocation depends on the strength of urban congestion effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3626

Classification and Topics

• Classification: Wirtschaft ; Economic Development: General ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General ; Economic Growth and Aggregate Productivity: General
• Subject: congestion ; endogenous growth ; Engel's law ; structural change ; urbanization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grossmann, Volker
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/52436
• Last update: 10.03.2025, 11:44 AM CET