Center for Regional Economic Development (CRED)

Location dynamics and regional economic policy 

Core competence: Urbanisation and periphery

The term urbanisation describes two developments: On the one hand, the increasing growth of cities into urban agglomerations and, on the other hand, the deepened interdependence between cities and the periphery. Today, urban centers provide living space for more than 50 percent of the global population and are important engines of economic growth. At the same time, peripheral areas are becoming increasingly marginalised due to the accelerating urbanisation.

The economic and social processes which accompany urbanisation and peripheralisation have far-reaching consequences for regional development. Questions arise about the redistribution of economic activity, adequate public services, urban-rural relations and the spatial implications of digitalisation.

Our work on urbanisation and periphery comprises two core areas: First, we investigate the mechanics of so-called agglomeration forces, which explain why economic performance is disproportionately concentrated in cities and why people are willing to accept price premiums for housing close to the centre. Secondly, we examine the impact of continuing urbanization on the economic development of different urban and peripheral areas and derive implications for regional policy strategies.

Do cities nurture more efficient social networks?

It has always been a central question of regional economics why global economic output is disproportionately concentrated in cities and why people are willing to accept price premiums for housing close to the centre. In this project we investigate a main hypothesis on agglomeration forces, which may help to explain why cities enjoy a productivity advantage that drive current urbanization rates: Agglomerations are more productive and offer higher wage levels because population density makes social networks more efficient and therefore accelerates the diffusion of information and knowledge.

Anonymised mobile phone data on Switzerland allow us to make social networks visible and to test three hypotheses derived from the above argument:

  • First, we show that social interactions strongly decrease with spatial distance; this finding confirms the basic assumption for the agglomeration channel described above.
  • Second, our study documents that social networks are actually more efficient in cities: While population density has no influence on the average number of social contacts,  cities benefit from better matching quality and less clustered interactions. Better matching quality raises the value of social interactions, and lower clustering accelerates the diffusion of information.
  • Third, Figures 2a to 2c illustrate that differences in network structure are capitalised into land prices: As conjectured, access to (2a) contact-rich networks with (2b) high matching quality increases the willingness to pay for land, while (2c) a high proportion of clustered contacts lowers land prices.

CRED: Urbanisierung und Peripherie / Urbanisation and periphery
Figure 1: Networks with a large average number of contacts, high matching quality and low redundancies increase land prices.

Overall, the observed spatial differences in network structures can explain 25 percent of the land price gap between cities and peripheral areas in Switzerland. This new evidence for positive externalities of high population density closes a long-standing gap in the regional economic debate.

Current projects

Working title Research question
Places that don`t matter? Socio-economic transformation of industrial towns in Switzerland and Slovenia (SNF, 11/2020-11/2023) How does the industrial structure of small and medium-sized towns change and evolve over time? Heike Mayer, Arnault Morrison, Cédric Lehmann, Colleagues from the Anton Melik Geographical Institute, Ljubljana
Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data
Does population density drive the structure of social interactions?
Konstantin Büchel, Maximilian von Ehrlich
Calling from the Outside: The Role of Networks in Residential Mobility Is it possible to predict residential moving decisions based on mobile phone data? Konstantin Büchel, Maximilian von Ehrlich, Diego Puga (CEMFI), Elisabet Viladecans-Marsal (IEB)
Digital Multilocality: Analyzing Urban-Rural Linkages in the Context of Co-Working Spaces in the Swiss Alps To what extent is digitalisation affecting labor markets and economic activity in mountain regions? Reto Bürgin, Heike Mayer, 
The Hidden Consequences of Digitalization for the Spatial Economy
Wie wirkt sich die fortschreitende Digitalisierung auf die räumliche Organisation der Wirtschaft aus? Maximilian von Ehrlich, Markus Schläpfer (ETHZ)
Slow Innovation in Europe’s Peripheral Regions Wie gestalten sich Innovationsprozesse in peripheren Räumen und wie unterscheiden sie sich von städtischen Innovationsprozessen?
Heike Mayer