Keys to the City: How Economics, Institutions, Social Interaction, and Politics Shape Development By Michael Storper

Abstract

Berkeley Planning Journal, Volume 27, 2014 Keys to the City: How Economics, Institutions, Social Interaction, and Politics Shape Development By Michael Storper Princeton University Press, 2013 Reviewed by Aksel Olsen Why do some city regions grow and others decline over time, and what are the defining local differences that make it so? Such complex questions are what motivate Michael Storper, one of the most cited economic geographers, in his new book, Keys to the City: How Economics, Institutions, Social Interaction, and Politics Shape Development. This wide-ranging work is hard to pigeonhole into the disciplinary boxes of fields—geography, economic history, and economics—that typically deal with such questions. Indeed, in Keys to the City, Storper is interested in connections between the different disciplinary optics. Playing Chicken with the Economists Storper begins with a larger, but important, conversation among urban economists about the main drivers of regional growth: When the national map of urban growth changes, is it best explained by migration flows to new regions, with jobs following once this population base is in place, or is it the reverse? Is migration the chicken or the egg, as Muth (1971) seminally asked it? In urban economics, it is commonly assumed that urban systems are in perfect spatial equilibrium (Glaeser and Gottlieb 2009) and that one cannot be made better off by moving to another place—the great amenities of San Francisco, New York, or Denver are perfectly offset by higher costs, traffic, or crime. Thus, people trade off amenities, income and housing costs, and price adjustments in real wages to ensure equilibrium. Consequently, the national system is “stable” and reflects an aggregate of individual preferences (and, of interest to planners, place-based policy is often seen as a counterproductive hindrance to economic efficiency). In this framework, exogenous changes to amenities—like the widespread introduction of air conditioning in the postwar years—can fundamentally change migration patterns and thus the new growth poles of the economy. Migration, in this common view, is the “chicken,” the leading indicator of future growth. Storper argues this framework is not convincing: the postwar migration