Urban Growth Drivers in a Europe of Sticky People and Implicit Boundaries

We investigate urban GDP pc growth across the EU12 using data for functionally definedcities - rather than administrative regions. We test hypotheses on the role of human capital,EU integration and fragmentation of urban government and explore spatial dependence andmechanisms of spatial interaction. Results are acceptable on standard econometric testswithout measures of spatial interaction but there is spatial dependence. If variables reflectingspatial adjustment are included, they are statistically significant and eliminate spatialdependence. Not only do the results now provide consistent estimates of parameters, theyalso support relevant theoretical insights and show national borders are still significantbarriers to economic adjustment. People in Europe are sticky so it is unreasonable to assumespatial disparities will disappear. Our findings also imply that cities in Europe form nationalrather than a single continental system.