Hierarchies of cities and the spatial filtering of industrial development

The spatial division of labor and external economies associated with the nation's hierarchical system of cities are postulated to be part of the process involved in the spatial filtering of industrial development. In this process high labor costs in metropolitan areas cause less competitive industries to restructure their operations or be priced out of the larger labor markets. The industries priced out of the markets locate all or some of their operations in smaller settlements in more distant areas where labor costs are lower, given sufficient external economies. The research supports this general proposition but reveals differences based upon the types of industries and the location of their headquarter facilities. It also reveals significant differences in the locational patterns and site selection criteria of different types of plants established by local, national and foreign firms; these differences foster the development of spatially bifurcated or dual labor markets that are associated with regional city size distributions.