The Talk of the Town: Human Capital, Information, and the Growth of English Cities, 1861 to 1961

Abstract The growth of cities virtually always accompanies modern economic growth. Many observers attribute the relationship to the rise of urban factories or improvements in transportation. We believe that information-based human capital, particularly as embodied in business professionals, provides a better explanation for the growth of cities. Cities grew because concentrated human capital raised productivity. In a study of English cities from 1861 to 1961 we found that cities whose work forces contained high proportions of business professionals grew more rapidly. The talk of the bourgeoisie, not the smoke of the factory, was the defining characteristic of the modern city economy.