Falling population shares: a highly-productive big city

Writing about Wales the other day I included this chart

wales 1

The comparable chart for Scotland is even more stark (16 per cent of the Great Britain population in 1801 and just over 8 per cent now).

But what really caught my eye when pulling together the numbers was this chart.

london 19.png

I guess part of my brain knew that greater London’s population had fallen for several decades, but that bit never quite connected with the bits thinking about world cities, agglomeration and so on and so forth.  London is one of the great world cities, a key financial centre in an age when capital is more mobile than it was for decades after the war.  There is no other really great city in the UK, the UK’s population hasn’t increased that rapidly by New World standards, and yet the share of the UK population resident in greater London is less now than it was for decades prior to World War Two (true even using the orange dot –  for which there is no time series – the estimate of the population of the (defined by contiguity of population rather than local authority boundaries) of the greater London urban area.

(As it happens, on checking one finds that the New York metropolitan area population is also lower now, as a percentage of the total US population, than it was several decades ago – I could only see data back to 1950.  But the US is different  –  there are multiple very large cities and the spread of air-conditioning greatly affected the liveability of many of those places.)

As you may recall from Saturday’s post, estimated GDP per capita in London is 188 per cent of that of the EU as a whole (and about 180 per cent of the UK as a whole).  The only other (Eurostat-defined) region that comes even close to London is (close to London) “Berkshire, Buckinghamshire, and Oxfordshire” (at 151 per cent of EU as a whole).

These have the feel of places where if more people were able to live there more people would be better off.  The whole of the UK might even be better off on average (a larger proportion of the population able to do more highly-productive jobs), even if the London premium over the rest of the country narrowed somewhat.

And yet, of course, as everyone knows London house prices are really expensive –  price to income ratios similar to those in Auckland (with incomes higher), typically for small houses and small sections.  You can tell similar stories about San Francisco/San Jose or New York (where GDP per capita are well above those of the US as a whole).   Rigged housing and land markets really seem to have visible consequences in pricing people out of working in highly productive cities.

Where the story is much less compelling is in Auckland (or Sydney or Melbourne). I wish it were otherwise –  I’m a strong supporter of land use liberalisation –  but

(a) on the one hand, the populations of those cities (urban areas) have actually increased very substantially as a share of national population (especially Auckland: 8.5 per cent of the population in 1901, and about 33.5 per cent now), and

(b) in none of the Australasian cities do the estimates for GDP per capita show up with any very substantial margin over the rest of the country (see, by contrast, London above).  People who just don’t earn that much (or produce that much) have found a way to live in those cities anyway.

Fixing the New Zealand urban housing markets is, or should be, a matter of dealing to one of the grosser injustices in our economic system, but it is far from obvious that there is a compelling case in issues around productivity and wider economic performance.  If anything, there are probably already more people in Auckland – and perhaps Sydney/Melbourne –  that there really are highly-productive opportunities that are either waiting for them now or would spring up were housing once again as affordable as it should be.

 

13 thoughts on “Falling population shares: a highly-productive big city

  1. New world city’s were build around good ports regardless of the rest of the terrain while old world city’s were built in very shallow fertile valleys with a navigable river. Typically allowing expansion in all 4 directions where as new world city’s can typically only expand in 3 directions (2 in Auckland’s case), thus one could expect infrastructure cost of old world city’s to be much lower than new world.

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      • With climate change inevitable, we should be moving our coastal cities further inwards and unfortunately those nice looking vacant mounts should be where new buildings should be sited if we want to avoid them being flooded out.

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      • With Tesla being sued for putting a volatile fire bomb battery in every car and a AI robot that locks up the car into a sealed up remote control coffin in an accident I think I will stick to my 3.5 litre petrol Lexus for awhile yet.

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  2. From an article by Robert Tombs titled “The squalid myth of Dickensian London” about London doubling its population in a decade: “” The rural poor, especially young people underemployed in over-populated villages, found in towns and factories an escape from dependency, chronic poverty and exclusion from adult life and marriage. However risky and accident-prone, a move to town meant more regular work, money in their pockets, freedom, the chance of family life, and exciting new social and cultural opportunities. Judging from their own writings, many working people felt not only that they were living in a rapidly changing world, but that it was changing for the better.”” Most of that could be applied to the attractions of our cities today although ‘village’, ‘chronic poverty’, ‘factory’ and ‘marriage’ have all modern equivalents.
    The population of London depends on what is defined as London – certainly high speed trains carry large numbers of commuters from fairly distant towns.

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    • What you describe is consistent with the modern literature on migration to Indian cities – dreadful as the slums often look to us, they still represent a gain for many/most migrants.

      Re London, I checked using the data for the whole south east, incl the (statistical) London area, and still the share of total GB population is lower than it was in 1951. I know some people commute from even further afield, but the commuting costs are so high that it acts as a barrier to relatively low productivity/low wage workers.

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      • I am a little surprised by your London data. However when I lived in Spitalfields I discovered the local recreational area had been slums until probably just after WW2. Taking it as a fraction of the population when the population has been increasing rapidly could be a trifle misleading. I do know as a young child interested in numbers London was over 9m and we competed with NY for big city honours. Then all manner of 3rd world citys grew rapidly and London shrank to about 7m – that would have been about 30 years ago when I last lived there. My visit last month found Walthamstow (about 10km from the city) where I had lived 45 years ago is to my surprise thriving. The other thriving activity in the UK is taking trains – I was very surprised to see an industry that had been in decline almost all of my life was enjoying a renaissance. However I have too much experience of London to risk travelling in the rush hour so I could not say if commuting has increased. My neice after 20 years in London is contemplating moving back to Lancashire; it is just too expensive living in London. If accommodation was the same throughout the UK then the majority of the population would pour into London (but not me).

        Of that list of factors that drive young people to cities I would focus most attention to “the chance of a family life”. I know many single women who are unlikely to ever get married and many men who are too self-centred to ever remain in a permanent relationship but this deep urge is over powering. Shane Jones regional development budget would be most effectively spent trying to create jobs for young women – do that and the men will stay.

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