The Creative Class, its Preferences, and Unbalanced Growth in an Urban Economy

A. Batabyal, P. Nijkamp

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

We theoretically analyze unbalanced growth in an urban economy arising from the preferences of the creative class concerning the relative desirability of agricultural, manufacturing, and service goods. We study two cases. In the first case, the production functions for the three categories of goods are identical. Our analysis leads to four results. First, we compute the equilibrium physical to creative capital ratios and the relationships between the neutral productivity shifters and the output prices. Second, we show that agricultural and services consumption are a constant multiple of manufacturing consumption. Third, we note that under certain conditions, an equilibrium in which all sectors of our urban economy grow at a constant rate does not exist. Fourth, we show that a constant growth path (CGP) equilibrium exists in which, across the three sectors, the pattern of consumption changes and there is a reallocation of creative capital. In the second case, the production functions for the three categories of goods are dissimilar. In this more realistic setting, we study generalizations of the previously described four results. © 2012 Springer-Verlag.
Original languageEnglish
Pages (from-to)189-209
Number of pages20
JournalJournal of Evolutionary Economics
Volume23
Issue number1
DOIs
Publication statusPublished - 2013

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