Liberal Institute Annual Lecture

November 30, 2023

Prague

“Cities as Labor Markets”

Alain Bertaud,
Mercatus Center, GMU
Marron Institute, NYU
acb16@nyu.edu
https://alainbertaud.com/
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 Cities as Labor Markets

A. Cities are primarily labor markets

B. Planners neglect the management of

street areas

C. We need to change the way cities are

managed, away from rigid master plans
and zoning laws
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A. Cities are primarily labor markets
○ Spontaneous order and randomness

○ The functioning of labor markets

requires top-down designed
infrastructure

3
 Cities are Labor markets,

Commuting trip patterns across various types of cities

explain how the labor market function

The 15 minute city!

This trip pattern implies
an unproductive
fragmented labor
market

4
In the New York metropolitan area, 73.6 % of
commuting trips are from suburbs to suburbs

5
 In the Paris metropolitan area 70.1% of
commuting trips are from suburbs to suburbs

6
Large labor markets are more efficient and creative
than smaller or fragmented ones

7
Commuting trip patterns in Asia’s cluster cities are more complex but
may create large labor markets of more than 50 million people!

8
 The Greater Bay Area (GBA) has now a population of
90,000 people, increasingly connected within less than one
hour commute one way!

9
 People do not move to cities to comply with a master plan

● People move to cities because of the

activities and qualities of the people who
are already there

● This is part of the spontaneous order!

10
 Infrastructure, designed top down, is
necessary for the functioning of large labor
markets

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The separation of private and public land

The Cerda’s Plan

for Barcelona
(1855)
The plan separated
public land from private
land long in advance of
development

12
Hundred and fifty
years later, the
street plan
remains
unchanged,
the use of
private space
has been
constantly
modified by
households and
firms
(spontaneous
order)

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 Cities and top-down design
The top-down development of infrastructure that allowed the
private development of Pudong, Shanghai financial center

14
The development of Pudong reflects markets, while the infrastructure
was top-down

15
B. Planners neglect the management of street areas

• Congestion pricing
• Parking as real estate value

16
The management of private and public land
21 Street, Manhattan

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However, this is not the solution!
The city seen as a giant Club Med!

18
 Congestion Pricing:
the goal is to improve speed and the use of street space not to tax cars

19
SINGAPORE’s Electronic Road Pricing (ERP)
● ERP is a system used to manage traffic congestion.
● The Land Transport Authority (LTA) regularly reviews the rate
and operating hours to keep traffic moving at an optimal
speed.

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Free Parking in Manhattan (54th street)

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 C. We need to change the way cities are
managed, away from rigid master plans and
zoning laws

● Planners should not attempt to design private lots through

regulations

● We should regularly audit all land use regulations and permit

processes

● Planners should manage cities through indicators

(affordability, commuting times) monitored quarterly
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 Planners often neglect the design of
public spaces for which they are solely
responsible,

But they overregulate the design of

private space that is subjected to markets

23
Because :
Too many apartments per acre
Too tall buildings
Too much commercial density
Too much lot coverage 24
We need to audit all land use regulations
inherited from the past
and remove the regulations that create
more problems than they solve

25
Managing cities through indicators

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 References
• Podcast with Tyler Cowen:
https://conversationswithtyler.com/episodes/alain-bertaud/
• Interview with Russ Roberts on Econtalk:
https://www.econtalk.org/alain-bertaud-on-cities-planning-and-order-without-design/
• Interview with Paul Romer:
• https://www.youtube.com/watch?v=DYOpjXg0Amc
• Institute for Liberal Studies, Ottawa:
https://www.youtube.com/watch?v=6bO8E7Av0eg
• Ryerson University Toronto Oct 2019:
https://ryecast.ryerson.ca//86/watch/15884.aspx?
• The cost of Utopia: Brasilia, Johannesburg and Moscow:
https://alainbertaud.com/wp-content/uploads/2013/06/AB_The-Costs-of-Utopia_BJM4b.pdf

Alain Bertaud's working papers related to urban policy and projects around the world can be
downloaded from his website https://alainbertaud.com/

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 The concepts of spontaneous order and top-down
infrastructure design are discussed in detail, including
quantifiable indicators, in my book
“Order without Design: How Markets Shape
Cities”
Published in 2018 by MIT Press

This book is also available in Chinese and Portuguese

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