Scaling and universality in urban economic diversification

20 January 2016

Hyejin Youn, Luís M. A. Bettencourt, José Lobo, Deborah Strumsky, Horacio Samaniego, Geoffrey B. West Published 20 January 2016.DOI: 10.1098/rsif.2015.0937

View Journal Article / Working Paper

Understanding cities is central to addressing major global challenges from climate change to economic resilience. Although increasingly perceived as fundamental socio-economic units, the detailed fabric of urban economic activities is only recently accessible to comprehensive analyses with the availability of large datasets. Here, we study abundances of business categories across US metropolitan statistical areas, and provide a framework for measuring the intrinsic diversity of economic activities that transcends scales of the classification scheme. A universal structure common to all cities is revealed, manifesting self-similarity in internal economic structure as well as aggregated metrics (GDP, patents, crime). We present a simple mathematical derivation of the universality, and provide a model, together with its economic implications of open-ended diversity created by urbanization, for understanding the observed empirical distribution. Given the universal distribution, scaling analyses for individual business categories enable us to determine their relative abundances as a function of city size. These results shed light on the processes of economic differentiation with scale, suggesting a general structure for the growth of national economies as integrated urban systems.