This paper extends the urban growth model of Duranton and Puga (2022) to explore the impact of cities on local firms and households and the aggregate economy of Germany. We adopt alternative micro-foundations for agglomeration economies and a non-linear specification of human capital...

We study the post-war effects of the bombing of German cities during WWII on urban growth and use the synthetic control method (SCM) to construct comparison units for affected West-German cities. The reason to use SCM is that cities might experience structural changes that have nothing to do...