2016-03-07economist.com

In 2001 the richest 50 cities and their surroundings (dubbed "metropolitan areas" by statisticians) produced 27% more per head than America as a whole. Today's richest cities make 34% more. Measured by total GDP, the decoupling is greater still, because prosperous cities are sucking in disproportionate numbers of urbanising Americans. Between 2010 and 2014 America's population grew by 3.1%; its cities, by 3.7%. But the 50 richest cities swelled by fully 9.2%.

Durham, whose population grew by about 7% in that period, provides some hints as to what makes a place flourish. The city thrives on its proximity to three top universities--Duke, North Carolina State and the University of North Carolina. Far-sighted planning in 1959 led Durham and its close neighbours, Raleigh and Chapel Hill, to establish a research park between the three cities. The idea was to coax the universities' boffins into business ventures. It worked; today 50,000 people work at site. Graduates flock there, often starting firms themselves.

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America's firms, too, are diverging. In the past two decades returns to investment at the most profitable 10% of firms have more than doubled by one measure, defying low interest rates in the economy as a whole. But returns for middling performers have increased only a little...

This bears directly on the inequality which matters most: wage inequality. Two recent studies suggest that the most of the increase in wage inequality over the last four decades is explained by wage gaps between firms rather than within them. A secretary will probably earn more working for Goldman Sachs than working for the local plumber; it is more lucrative to be a programmer at Facebook than in a corporate back-office. That means that bringing high-skilled workers to an area is not enough to guarantee high wages; the right firms must come to town too. Mr Bell says Durham is becoming more discerning about which firms it tries to lure.



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