Urban growth drivers in a Europe of sticky people and implicit boundaries

We investigate urban GDP per capita growth across the EU12 usingdata for functionally defined cities—rather than administrativeregions. We test hypotheses on the role of human capital, EUintegration and fragmentation of urban government and explorespatial dependence and mechanisms of spatial interaction. Resultsare acceptable on standard econometric tests without measuresof spatial interaction but there is spatial dependence. If variablesreflecting spatial adjustment are included, they are statisticallysignificant and eliminate spatial dependence. Not only do theresults now provide consistent estimates of parameters, butthey also support relevant theoretical insights and show nationalborders are still significant barriers to economic adjustment.People in Europe are sticky so it is unreasonable to assumespatial disparities will disappear. Our findings also implythat cities in Europe form national rather than a single continentalsystem.