Colombia Research

This chapter first discusses the necessity of defining metropolitan areas and current practice in several countries. It argues for the use of a simple algorithm that exploits cross-municipality commuting patterns. Municipalities are aggregated iteratively provided they send a share of their commuters above a given threshold to the rest of a metropolitan area. This algorithm is implemented on Colombian data and its robustness is assessed. Finally, the properties of the resulting spatial labour market networks are explored.

I estimate the effect of major roads within and between cities on the level and composition of trade for Colombian cities. I confirm that road distance between cities is a major impediment to trade. In addition, major roads within cities have a large effect on a city׳s exports and imports with an elasticity of approximately 0.20 estimated with ols and up to 0.50 with iv. If anything, the effects are stronger for the value than for the weight of exports. I interpret these results as city roads shifting economic activity in cities towards the production of tradable and somewhat lighter goods.

I estimate an elasticity of wages with respect to city population of about 5% for Colombian cities. This finding is robust to a number of econometric concerns. The second main finding is a negative effect of market access on wages. Third main finding regards stronger agglomeration effects in the informal sector. This third finding provides an explanation for a range of other negative findings, including only weak evidence in favour of human capital externalities, no evidence of a complementarity between cities and skills, and an absence of stronger agglomeration effects for older workers as would be predicted by the existence of learning effects. I do not find measurable effects of roads or amenities on wages either.

I develop an integrated approach to examine the drivers of population growth in Colombian cities between 1993 and 2010. Fertility plays an important role. Much of the higher growth of some Colombian cities can also be associated with higher wages. In turn, this wage advantage of some cities can be, in part, traced back to city education and industry shocks. I also find that roads matter but obtained mixed evidence about the role of urban amenities and no evidence regarding measures of urban costs and other drivers of urban growth that have been commonly considered by past literature. Some determinants of long-run city growth are also explored.