Cities and the organization of manufacturing

This paper provides some recent evidence on the distribution of manufacturing activity across cities in the US. For overall manufacturing, the number of establishments increases more than proportionally with city population, total employment increases in proportion to city population, and the employee size of an establishment is stochastically decreasing as city population increases. While these results are partly driven by the differences in industry composition across cities, for many industries larger cities tend to accommodate more employment through an expansion in the number of establishments, but not necessarily through an increase in average establishment size.