The Social Advantage of Large Cities

From Silicon Valley to Shanghai, cities are increasingly seen as engines of economic progress. Cities bring together diverse groups of people and companies in ways that increase productivity and create the networks, clusters, and chance interactions that lead to the discovery of new innovations and the creations of new entrepreneurial businesses. Up until now, the economic performance of cities has been gauged in terms of the education or human capital level of residents or the kinds of work they do.

But new research by my colleagues at the Martin Prosperity Institute sheds light on the relationship between cities and three underlying types of workforce skills--physical skills of the sort used in manufacturing, analytical or cognitive skills, and social intelligence skills like the ability to direct teams, form entrepreneurial new businesses and organizations, and mobilize both people and resources behind common causes and objectives. The chart below plots the distribution of these three sets of skills by city size.

The relationship between skill and size is striking. On the one hand, smaller cities have more physical skill. As the chart shows, physical skills are negatively associated with city size. On the other hand, bigger cities account for more social and analytical skills. Both sets of skills increase with the size of cities. Social intelligence skills in particular are found in the largest cities and metro areas. And the largest cities have increased the proportion of social intelligence skills they account for over the past decade. Larger cities not only draw more educated and innovative people, but more people with the critical social skills required to turn new ideas into successful enterprises and industries.

This is in line with Jane Jacobs' early thinking that cities are containers for a diverse mix of people and skills. And it also helps us understand some of the deeper reasons for the success of larger cities, the plight of smaller ones, and our increasingly spiky economic landscape.