Population concentration and productivity in the metropolitan area: Evidence from Indonesia

Adista Hanif Baskara Widya, Djoni Hartono, Kenny Devita Indraswari, Lourentius Dimas Setyonugroho

Research output: Contribution to journalArticlepeer-review

Abstract

Economic activities are highly concentrated in a tiny geographical areas which are considered as areas providing increased returns. A vast amount of empirical evidence has shown that more significant population enhances urban agglomeration externalities, but small knowledge whether the urban population distribution influences that context. This study aims to examine how the urban population concentration in 10 Indonesian metropolitan areas affects productivity. Based on the estimation of a pooled cross-section time-series model from 2000 to 2014, this study revealed that the population distribution has a strong influence on the productivity of metropolitan areas. In terms of elasticity, an average increase of 1% in the degree of population concentration resulted in a rise in productivity per worker by 0.17%. However, this study also found that the combination of population concentration and population size might bring unintended effect within Indonesia's metropolitan areas setting. In summary, this study provided new evidence that explicitly expressed the fact that the degree of population concentration is a vital source of urban aggregate in agglomeration economies.

Original languageEnglish
Pages (from-to)453-466
Number of pages14
JournalInternational Journal of Economics and Management
Volume13
Issue number2
Publication statusPublished - 1 Jan 2019

Keywords

  • Agglomeration economies
  • Metropolitan
  • Population concentration
  • Productivity

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