Agglomeration and labour productivity in Australian cities

Australia's major capital cities are a driving force behind the national economy, but macroeconomic and microeconomic reforms can no longer provide the productivity improvements which will drive the Australian economy forward.The last frontier to boosting Australia's productivity is in the way we spatially organise our cities. Increasing the level of agglomeration - via improved transport linkages, increasing employment densities within existing employment clusters, or expanding the area of employment clusters - can boost labour productivity.

In a paper to the Melbourne 2010 Knowledge Cities World Summit, Terry Rawnsley (SGS Associate Director) and Julian Szafraniec (SGS Senior Consultant) described research which has developed the understanding of the relationship between agglomeration and labour productivity in Australian cities.The paper constructs a dataset to examine the labour productivity of Australian cities, and uses Melbourne as a case study to demonstrate the relationship between agglomeration and labour productivity. The paper also suggests areas for further research and policy implications.

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