Urban Growth Will Continue. But Cities May Be Self-Selecting.

Two decades ago, Nobel Prize economist Robert Lucas observed: “What can people be paying Manhattan or downtown Chicago rents for, if not for being near other people?” That statement was true 20 years ago—and, despite Covid-19, it will be true 20 years from now, too. The same fundamentals will continue to drive urban growth.

It’s useful to recall that Covid-19 is not a unique event. The 1918–19 Spanish flu, much more lethal than Covid, did not halt the exodus from countryside to city, then in full swing in industrializing nations. Before the medical advances of the twentieth century, cities were deadlier than the countryside, hotbeds of infection and disease. Yet rural folk kept flocking to cities in America, Europe, and elsewhere. Such was (and remains) the power of what economists call agglomeration. Writing in the American Economic Review in 2002, Donald Davis and David Weinstein, two American economists, showed how Hiroshima and Nagasaki, after being flattened by the atomic bomb, resumed their growth paths 20 years later—powerful proof of the resilience of cities. If the atom bomb failed to arrest their growth, why would a passing pandemic, however destructive, do so?

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