A comparison of individual, metropolitan area, and national income regressions shows that the correlation between human capital and incomes gets stronger at higher levels of aggregation.#
Agglomeration economies that operate within industries are often called localization economies, while agglomeration economies that work across industries are referred to as urbanization
economies.#
Agglomeration economies are, at their root, advantages that come from reducing transportation costs. After all, urban density is just the absence of physical space between people and firms. #
Outside of stable democracies there is a large return to firms in being close to the corridors of power. Those returns then attract people and firms, and help explain why capital cities are so much larger in unstable or dictatorial nations.#