Cities and Ideas
Faster technological progress has long been considered a key potential benefit of agglomeration. Physical proximity to others may help inventors adopt new ideas in their work by increasing awareness about which new ideas exist and by enhancing understanding of the properties and usefulness of new ideas through a vigorous debate on the ideas' merits (Marshall, 1920). We test a key empirical prediction of this theory: that inventions in large cities build on newer ideas than inventions in smaller cities. We analyze the idea inputs of nearly every US patent granted during 1836–2010. We find that a larger city size provided a considerable advantage in inventive activities during most of the 20th century but that in recent decades this advantage has eroded.
We thank Lee Fleming, Bruce Weinberg, and seminar participants at Aalto University, UC-Berkeley Innovation Seminar, and Innovation in an Aging Society working group for comments. We acknowledge financial support from the National Institute on Aging grant P01-AG039347. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.