#PLG300 #12
Why does a city region grow?
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Globalization
Labour
Institution/government
Specialization
Access
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Specialization
o If you are an individual specializating access is important (including access to hubs
where similar industries work), but for a region this is not the only factor for growth.
Labour
o Key driver in where people locate in a region
Location
o Cost of things goes up as cities become more urban, and if cost goes up then we are
going to expect to see slower growth.
Factors when deciding about locating somewhere
Institution
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Services
o Transportation
o Healthcare
 Is there access to good healthcare?
 Am I buying into a country with the best possible care for my circumstances?
Economists say that 3x the yearly household income is the best amount to outright buy a house. In
Toronto’s case we are well beyond that.
Prices and their effect on firms
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Price of land goes up I’m less willing to spend money on people
Price of people goes up I’m less willing to spend money on land
If housing is very expensive people are going to want firms to pay them more in order to move
to that area (or stay in that area)
Other factors exist. For instance if people are more happy this could shift the curve for residents
to the left, causing firms to pay less for labour but more for land (see graph below)
Land Costs
Residents (after shift)
Residents (before happiness shift)
Firms
Price of Labour
This graph is showing that if residents are more happy they are more likely to see higher land costs, but
firms are also likely to see lower prices for labour (because people are more willing to take a pay cut)
Land Costs
Residents (after shift)
Residents (before happiness shift)
Firms (before shift)
Firms (after shift)
Price of Labour
If firms are doing better than the price of land goes up in relation to the price of labour.
Prices for consumers (people)
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