A Theory of Heterogeneous City Evolution with Heterogenous Agents

This paper develops a new unified theoretical general equilibrium model in which the interactions between heterogeneous workers and firms influence city evolutions. Given worker–firm–city framework, I study depth possible heterogenous evolutions resulting implications on labor market, as well overall productivity. In particular, it is shown that same exogenous shocks may lead to completely different results depending relative dominance of two countervailing effects congestion agglomeration. an open economy setting, also such affect trading partner generate comovement evolution each country.