Edward Glaeser on why human beings love and need cities, or why we choose to live so close to one another:
Perhaps the clearest reason why people cluster together in cities is that wages and productivity rise with density.
But interpreting these results is tricky:
If cities are machines for learning, as suggested by the fact that wages rise more quickly in cities, then a young person who moves from rural India to Bangalore won’t become instantly more productive. The result on the wage gains of movers suggest that some of the productivity differences across space may reflect the selection of more skilled people into cities. But in my opinion, they somewhat overcorrect, and eliminate the impact that cities have on learning. As such, they may be something of a lower bound on the true connection between productivity and density.