Cities with forking paths? Agglomeration economies in New Zealand 1976–2018

We consider whether external urban economic advantages (agglomeration economies) vary with time and space using detailed micro-data on 134 locations in New Zealand for the period 1976–2018. We find subtle temporal variation, with estimates of agglomeration economies peaking in 1991 and then falling by approximately 1 percentage point in the subsequent 15-years. Since 2006, however, estimates have remained broadly stable; the world has not been getting “flatter”. Our results reveal more significant spatial variation: Large cities offer net benefits in production but not consumption, whereas small locations close to large cities (“satellites”) experience agglomeration economies that are stronger than average