Diversity and Specialisation in Cities: Why, where and when does it matter?”, Centre for Economic Performance Discussion Paper 433

Summary. Why are some cities specialised and others diversi ed? What are the advantages and disadvantages of urban specialisation and diversity? To what extent do the structure of cities and the activities of rms and people in them change over time? How does the sectoral composition of cities in uence their evolution? To answer these and related questions, we rst distil some key stylised facts from the empirical literature on cities and the composition of their activities. We then turn to a review of different theories looking at such issues, and study the extent to which these theories contribute to the understanding of the empirical regularities. 1