Handbook of Regional and Urban Economics

Abstract

This chapter discusses theoretical and applied research in urban economics on decentralized cities, i.e., cities in which employment is not restricted to the central business district. The first section discusses informally the incentives that firms face to suburbanize. The next section summarizes the theoretical literature on decentralized cities, including both models which solve for the optimal spatial pattern of employment and models in which the spatial pattern of employment is exogenously determined. In other sections, I discuss rent and wage gradients in decentralized cities and review the empirical literature testing whether, or not, wage gradients exist in urban areas. A section covers the question of whether people follow jobs or jobs follow people to the suburbs and the last section discusses the "wasteful" commuting controversy.