Ricerc@Sapienza

The association between city size and productivity has been widely investigated in the academic literature. On the contrary, less is known about the link between city size and material living conditions. Recently, a strong emphasis has been put on the process of urbanization without growth and on the burst of large cities. The creation of slums and large areas with underdeveloped housing characteristics has become a major concern for urban planners. This is especially the case for developing economies.

This article investigates the incidence of agglomeration
externalities in Ecuador, a small‐sized, middle‐income
developing country. In particular, we analyze the role of
the informal sector within these relations, since informal
employment accounts for a significant part of total employment
in the developing countries. Using individual level data
and instrumental variable techniques, we investigate the
impact of spatial externalities, in terms of population density,
local specialization and urban size, on the wages of workers