The Causal Relationship between Employment and Business Networks in U.S. Cities

ABSTRACT:

Scholars from a range of disciplines have long recognized that a city’s economic fortunes are closely tied to its position in networks of interurban exchanges. However, it remains unclear whether cities occupy a central position in the network because they are sites of significant economic activity (i.e., a flow generation hypothesis), or whether they experience greater economic growth because they occupy a central position in the network (i.e., a structural advantage hypothesis). This article tests these complementary hypotheses by examining the total nonfarm employment in, and air travel patterns of business passengers among, 128 U.S. metropolitan areas from 1993 to 2008 using a series of lagged regression models. Results lend support to the structural advantage hypothesis, but not for the flow generation hypothesis: centrality drives employment, but not vice versa. The article concludes with a discussion of the implications of these results for infrastructure-focused approaches to economic development.