workforce. Perhaps it will simply take several more decades to reach the
hypothesized long-run equilibrium.
An alternative view is that current employment location patterns do represent
an equilibrium, but one in which some form of local agglomeration offsets
existing wage differentials. For example, if it were assumed that center size
generates some form of ‘‘increasing returns,’’ then centers of large, mid, and
small size might all coexist within a metropolitan area. In this equilibrium, the
advantage to firms of center size would be exactly offset by higher wages, that
in turn are necessary because of the increased commuting costs that workers
have to expend to get to larger centers. It is important to realize that the
‘‘increasing returns’’ necessary in this case must be specific to each subcenter.
Most existing theories of agglomeration, whether based on information exchange JaffeeŽ et al. 10 , industrial linkages Henderson 8 , or labor market . Ž .
search Kim 11 all hypothesize that these forces operate at a metropolitan-wideŽ .
level.