Defining urban clusters to detect agglomeration economies

Agglomeration economies are a persistent subject of debate in regional science and city planning. Their definition turns on whether or not larger cities are more efficient than smaller ones. Here, we complement existing discussions on agglomeration economies by providing a sensitivity analysis of estimated externalities to the definitions of urban agglomeration. We regress wages versus population and jobs over thousands of different definitions of cities in France, based on an algorithmic aggregation of spatial units. We also search for evidence of larger inequalities in larger cities. This paper therefore focuses on the spatial and economic complexity of the mechanisms defining agglomeration within and between cities.