The world is increasingly spiky. Inequality is growing and it is increasingly geographic in nature. We know that people tend to make more money in urban areas compared to rural areas – even when they possess the exact same level of education. The returns to being smart and educated are simply greater in cities.

But they also depend on the size of the city. Mark Muro and Jacob Whiton of Brookings recently published data looking at labor market performance – by metro size – from 2009-2015 (right after the financial crisis). What they found is that larger metropolitan areas simply performed better than smaller ones.

In summary:

City size matters because it’s a major influence on city prosperity and adaptability as well as local worker fortunes. Bigger cities are more

Josh Lehner of the Oregon Office of Economic Analysis published a study earlier this summer where he looked at employment growth according to city size across the US.

What he found since the Great Recession of 2008-2010 is that larger metros – with populations greater than 1 million people – have rebounded the fastest. They are shown in the light blue line below:

According to Josh:

This is at least partially due to the fact that all those good economic things — agglomeration effects, knowledge spillovers, clustering, etc — happen in certain locations, which are usually bigger cities.

However, if you go back to the 1980s, you find that this trend isn’t consistent. Large metros outperformed in the late 90s. But they were more or less on par with smaller metros during the housing boom of the early 2000s and actually under performed in the early 90s recession.

One possible explanation for this – which Josh proposes – is that the recent housing boom acted as a sort of equalizer for smaller metros. It created stronger population growth outside of the bigger cities.

I buy that.

But then does that mean that going forward big cities will continue to outperform? Is this going to be more or less the new norm? Intuitively, I would think yes.

You can find Josh’s blog post,

The MIT Senseable City Lab recently teamed up with a few other research groups to investigate the relationship between human interactions and city size. If you happen to be a member of the Journal of the Royal Society Interface, you can download the full report here. But in true ATC fashion, I’m going to give you the Coles Notes version here.

What the study did was look at billions of anonymized mobile phone data in both Portugal and the UK in order to determine how our real life social networks change with city size. And what they found is a pretty consistent relationship:

[T]his study reveals a fundamental pattern: our social connections scale with city size. The larger the town you live in, the more people you call and the more calls you make. The scaling of this relation is “super-linear,” which means that on average, if you double the size of a town, the sum of phone contacts in the city will more than double – in a mathematically predictable way.

What’s interesting about this finding is that it starts to explain how cities–and the clustering of people–can act as fertile ground for the exchange of ideas and knowledge. The bigger the city the more people you probably know.