Ten insights on cities, urban growth, and vibrancy

As the District of Columbia navigates one of its most challenging economic periods since the 1990s, the policies implemented today on housing, education, and workforce development will shape the city’s trajectory for years to come. To help policymakers understand what drives urban success, the D.C. Policy Center’s Alice M. Rivlin Initiative has selected ten insights from existing research on cities, urban growth, and vibrancy. Each insight is accompanied by a District-related fact.  

Insight #1: Cities thrive when people and firms cluster.

Cities work best when people and firms are near one another. Clustering reduces transport costs and creates opportunities for the sharing of ideas and specialization. Firms benefit from a pool of specialized workers, while workers enjoy better employment prospects and higher productivity. Silicon Valley’s success is a standard example. The clustering of specialized firms and workers contributed to productivity gains and impressive innovation.¹ 

Clustering also creates costs. If a city does not manage growth appropriately, increasing numbers of people can lead to congestion, higher housing costs, and potentially greater public safety or health risks. Urban policies must preserve the benefits of clustering while mitigating its costs.²

D.C. Fact #1:  In 2025, the District was the ninth-densest county—measured by population per square mile—in the United States. The densest county in the U.S. was New York County, which contains Manhattan, while the second-densest county was Kings County in New York, which contains Brooklyn. Philadelphia County ranked just above the District—making Philadelphia County the eighth-densest county in the U.S.³

Insight #2: Educated workers often concentrate in larger cities.

Large cities tend to have a higher concentration of highly educated workers. Economists have given two complementary explanations. One explanation emphasizes productivity gains. In general, workers tend to be more productive in cities. But there is also evidence to suggest that highly educated workers may benefit more than their less-educated counterparts. This difference may arise, in part, because the industries that tend to employ more educated workers also tend to locate in larger cities. Another explanation emphasizes “consumption amenities.” Educated workers reside in cities because of the greater diversity of amenities—including restaurants, retail shops, and cultural institutions—that may be less prevalent in smaller cities.⁴

D.C. Fact #2: The District is a city with a highly educated civilian population. In 2025, almost 38 percent of the city’s civilian population aged 16 or older had an advanced degree, and 29 percent had a bachelor’s degree. The educational attainment of the nation as a whole offers a clear contrast. Only 22 percent had a bachelor’s degree, and an even smaller share, 13 percent, had an advanced degree.⁵

Insight #3: Universities can help anchor urban success.

Senator Daniel Patrick Moynihan once remarked that if one wants to make a city great, one should “create a great university and wait 200 years.”⁶ Moynihan’s remark captured an important truth. Good universities can develop and attract an educated workforce. That is not all. Universities also facilitate the exchange of ideas that can help advance local innovation. But a well-regarded university is not a magic elixir for economic success. Some university cities, such as New Haven, home to Yale University, have been less economically successful than other university cities.⁷

D.C. Fact #3: The District of Columbia is home to three universities—Georgetown University, George Washington University, and American University—that are ranked among the top hundred by U.S. News & World Report in 2026.⁸

Insight #4: Innovation often emerges spontaneously.

Innovation rarely emerges from government policy directly, but well-designed policies can create an environment where innovation becomes more likely. Economists tend to caution against trying to pick winners.⁹ The historical record supports this point. A number of major companies, including Dell and Apple, began in garages, basements, or dorm rooms.¹⁰ Nevertheless, innovative cities typically have a highly educated workforce, leading universities, and a culture that supports innovation.¹¹

D.C. Fact #4: The now-major educational technology firm Blackboard began in the basement of a house in the District in the late 1990s. Almost three decades later, the company continues to operate in the District.¹²

Insight #5: SAT and ACT scores are more predictive of college performance than high school GPAs.

SAT and ACT scores are correlated with college GPAs and, among students who attend selective colleges, with career outcomes such as earnings. By contrast, high school GPAs are substantially less predictive of undergraduate academic performance.  During the COVID-19 pandemic, many universities did not require applicants to report their SAT or ACT scores. However, research suggests that Ivy League applicants who took advantage of this option had lower undergraduate GPAs.¹³ For these reasons, standardized test scores are an important but imperfect measure of student preparedness for college and may also predict career outcomes.

D.C. Fact #5: In recent years, high school graduation rates and SAT scores have diverged across the nation.¹⁴ In the 2024-2025 school year, the average SAT score for students attending DCPS¹⁵ high schools was 913 out of 1600.¹⁶ DCPS serves approximately 60 percent of all public high school students in the District.¹⁷ For context, typical students admitted to Georgetown University have SAT scores ranging from 1390 to 1550. At George Washington University, the range is 1350 to 1500, and at American University, it is 1280 to 1450.¹⁸  

Insight #6: Smart investments in early childhood education have a high rate of return—at both the individual and societal levels.

In the short and long term, investing in early childhood programs yields benefits at both the individual and societal levels. At the individual level, such investments are associated with improved social and cognitive development in children, as well as better educational and employment outcomes in adulthood. At the societal level, well-designed investments in early childhood programs are associated with better economic growth and reduced crime.¹⁹

D.C. Fact #6: Research by the D.C. Policy Center’s Education Policy Initiative suggests that pre-kindergarten enrollment will be most affected by the decline in births in the District. Between 2016 and 2024, births in the city fell from 9,854 to 7,602—a decline of almost 23 percent.²⁰

Insight #7: Housing and city growth are closely linked.

Housing prices are usually higher as one moves closer to a city’s center. These higher prices likely reflect the demand for amenities and the opportunities offered by city centers. High housing prices also reflect the regulatory obstacles that slow the building of new housing in many major cities.²¹

Metro areas such as Dallas and Miami, once known for substantial housing growth, have seen that growth slow in recent years. Between 2020 and 2023, housing growth in these metro areas converged with that of supply-constrained metro areas such as Washington, D.C., Los Angeles, and San Francisco.²² When housing production slows, cities may struggle to provide reasonably priced housing for the essential workers who help keep the city running.²³

D.C. Fact #7: Much of the new housing built in the District between 2000 and 2020 resulted from the rezoning of non-residential areas. But this new housing was not evenly distributed across the city. Ten neighborhoods accounted for roughly 40 percent of the growth.²⁴  

Insight #8: The rise of remote work was associated with a population shift to the suburbs and exurbs.

The COVID-19 pandemic and the rise of remote work were associated with people moving from central business districts (CBDs) in major cities to the suburbs or exurbs.²⁵ One study memorably called this shift the “donut effect.”²⁶ A city’s central business district represented the hole in the donut, while the suburbs and exurbs represented the donut’s solid outer ring. As a result of the population shift, home values in city centers grew more slowly. By contrast, home values in the suburbs and exurbs grew more quickly.²⁷

D.C. Fact #8: The District was no exception to the “donut effect.” During the pandemic, the city lost an estimated 155,550 commuters. The region’s suburbs and exurbs grew, while downtown D.C. lost population.²⁸ By 2023, the donut effect had dissipated.²⁹

Insight #9: Remote work has driven up downtown office vacancies. Technological change makes it uncertain whether office market demand in major cities will return to pre-pandemic levels.

Economist Joseph Gyourko has suggested that the rise of remote work may represent a disruption to downtown office buildings comparable to the kind of disruption that Amazon brought to shopping malls. With fewer people downtown, the health of downtown office markets and the property tax coffers of major American cities will likely come under pressure.³⁰ Moreover, technological developments may make it harder to reduce the elevated office vacancy rates. The development of cloud storage and online video conferencing, along with the relative ease of equipping employees with laptops, has weakened businesses’ need for large amounts of office space to operate effectively.³¹  

D.C. Fact #9: The popularity of remote work and higher office vacancy rates have affected the composition of the District’s tax revenues. Between 2010 and 2021, real property taxes consistently generated a greater share of the District’s total tax revenue than individual income taxes. In 2022 and 2023, that was no longer the case. The share of revenue generated by individual income taxes surpassed that of real property taxes.³²

Insight #10: Remote work was not associated with a sustained increase in geographic mobility.

Geographic mobility in the United States has been declining since the 1980s.³³ In 2024, national household mobility fell to its lowest level since measurement began in 2006.³⁴ What has changed is where people move. Since the COVID-19 pandemic, people who have moved have relocated to smaller metro areas, lower-density suburbs, and rural areas instead of more tightly packed metro areas.³⁵ 

D.C. Fact #10: In 2022, most people who moved into the District came from Maryland, while those who moved out of the District relocated to Virginia or Maryland.³⁶

1. Edward L. Glaeser, “Introduction,” Agglomeration Economics edited by Edward Gleaser, (Chicago: University of Chicago, 2010); Edward L. Glaeser, “Are Cities Dying?,” Journal of Economic Perspectives 12, no. 2 (1998): all but esp. p. 145-146, 148-149; Kathleen Bolter and Jim Robey, “Agglomeration Economies: A Literature Review,” W.E. Upjohn Institute for Employment Research, September 9, 2020.
2. Giles Duranton and Diego Puga, “The Economics of Urban Density,” Journal of Economic Perspectives 34, no. 3 (2020): 3–26; Edward L. Glaeser, “Are Cities Dying?,” Journal of Economic Perspectives 12, no. 2 (1998): p. 139–160.
3. United States Census Bureau, “Highest Density.” See the counties tab. 
4. Jeffrey Brinkman, “Big Cities and the Highly Educated: What’s the Connection?,” Federal Reserve Bank of Philadelphia Research Department, Third Quarter (2015), all but esp p. 10-12.
5. Daniel Burge, “A risk to the District of Columbia’s superstar status,” D.C. Policy Center, July 9, 2026.
6. Edward L. Glaeser, “Done Right, New Applied Science Center for New York Makes Sense,” The New York Times: Economix, March 22, 2011.
7. Enrico Moretti, “Are Cities the New Growth Escalator?,” Policy Research Working Paper # 6881, The World Bank, May 2014, all but esp. pp. 17-19.
8. “2026 Best Colleges in the District of Columbia,” U.S. News & World Report.
9. Kathleen O’Toole, “Enrico Moretti: The Geography of Jobs,” Insights by Stanford Business, June 10, 2013; William R. Kerr and Frédéric Robert-Nicoud, “Tech Clusters,” Journal of Economic Perspectives 34, no. 3 (2020): 50–76.
10. Erin McDowell and Caroline Fox, “15 of the most successful companies that started in homes, basements, sheds, and bedrooms,” Business Insider, April 20, 2023.
11. William R. Kerr and Frédéric Robert-Nicoud, “Tech Clusters,” Journal of Economic Perspectives, 34, no. 3 (2020): 50–76, esp. p. 63; Aaron Chatterji, Edward L. Glaeser, and William R. Kerr, “Clusters of Entrepreneurship and Innovation,” NBER Working Paper # 19013, May 2013.
12. “Blackboard is shifting its D.C. headquarters,” DC.gov, Office of the Deputy Mayor for Planning and Economic Development (DMPED), August 13, 2025.
13. John Friedman, Bruce Sacerdote, and Michele Tine, “Standardized Test Scores and Academic Performance at Ivy-Plus Colleges,” Opportunity Insights: Data Insights, January 2024. See also Elizabeth Cascio, Bruce Sacerdote, Doug Staiger, and Michele Tine, “Report From Working Group on the Role of Standardized Test Scores in Undergraduate Admissions,” Letter to President Beilock and Dean Coffin, Dartmouth College, January 30, 2024.
14. Nicholas Dodds, “Rising Graduation Rates and Falling SAT Scores for D.C. Students,” D.C. Policy Center, March 29, 2024.
15. “DCPS” stands for District of Columbia Public Schools.
16. “DCPS Data Set – SAT,” District of Columbia: Public Schools, December 9, 2025. The website notes that “The scores were calculated using each student’s highest possible combination of reading, math, and writing scores across all SATs that they took during the year.”
17. “Chapter 4- Enrollment Patterns” EdScape, Office of the Deputy Mayor for Education.
18. College Board, “Georgetown University Admissions,” Big Future; College Board, “American University Admissions,” Big Future; College Board, “George Washington University Admissions,” Big Future.
19. Council of Economic Advisers, Economic Report of the President, 2023, chap. 4, “Investing in Young Children’s Care and Education” (Washington, DC: U.S. Government Publishing Office, March 2023), esp. pp. 125-127; See also Greg J. Duncan and Katherine Magnuson, “Investing in Preschool Programs,” Journal of Economic Perspectives 27 no. 2 (2013): 109–132.
20. Anoosha Imran and Chelsea Coffin, “Updating D.C.’s enrollment projections: Trends, methodology, and implications,” D.C. Policy Center, March 26, 2026.
21. Yesim Sayin and Emilia Calma, “Breaking the scarcity-subsidy cycle: A new housing vision for the District of Columbia,” D.C. Policy Center, May 12, 2026; Joseph Gyourko, Christopher Mayer, and Todd Sinai, “Superstar Cities,” American Economic Journal: Economic Policy 5, no. 4 (November 2013): 167–199.
22. Edward L. Glaeser and Joseph Gyourko, “America’s Housing Affordability Crisis and the Decline of Housing Supply,” Brookings Papers on Economic Activity, BPEA Conference Draft, March 27–28, 2025; See also Daniel Burge and Yesim Sayin, “Is the District of Columbia still competitive?” D.C. Policy Center, December 4, 2025. 
23. Yesim Sayin and Emilia Calma, “Priced out: Where can D.C.’s essential workers afford to live?,” D.C. Policy Center, July 18, 2024.
24. Leah Brooks and Jenny Schuetz, “Where 20 years of new housing was built in Washington, DC—and where it wasn’t,” Brookings, September 18, 2023. See also Yesim Sayin and Emilia Calma, “Breaking the scarcity-subsidy cycle: A new housing vision for the District of Columbia,” D.C. Policy Center, May 12, 2026.
25. Adam G. Levin, “Economic Development Implications of Remote Work in the Post-Pandemic Environment,” Product # R48528, Congressional Research Service (CRS), May 8, 2025.
26. Arjun Ramani and Nicholas Bloom, “The Donut Effect of Covid-19 on Cities,” NBER Working Paper # 28876, December 2022.
27. Arjun Ramani and Nicholas Bloom, “The Donut Effect of Covid-19 on Cities,” NBER Working Paper # 28876, December 2022, all esp. Appendix A3.
28. Bailey McConnell and Yesim Sayin, “Remote work and the future of D.C. (Part 1): How is remote work changing the geography of work in the District of Columbia?,” D.C. Policy Center, May 12, 2022.
29. Daniel Burge, “Chart of the Week: D.C.’s population growth outpaced the region’s inner counties between 2022 and 2023, but some of the region’s suburbs and exurbs grew even faster,” D.C. Policy Center, March 22, 2024.
30. “Next Crisis: Empty Office Buildings | Joe Gyourko” Knowledge at Wharton: Ripple Effect, May 14, 2024.
31. “A new working order: Reimagining offices in a hybrid world,” Moody’s, September 10, 2024; Lawrence H. Summers, “Accepting the Reality of Secular Stagnation” IMF Finance and Development Magazine, March 2020. See also Daniel Burge and Yesim Sayin, “Is the District of Columbia still competitive?” D.C. Policy Center, December 4, 2025.
32. Daniel Burge, “Chart of the week: The District’s increasing reliance on income taxes,” D.C. Policy Center, July 11, 2025.
33. Raven Molloy, Christopher L. Smith, and Abigail K. Wozniak, “Internal Migration in the United States,” NBER Working Paper # 17307, August 2011, pp. 2, 42 (Figure 2).
34. Riordan Frost, “Household Mobility Fell to Record Low in 2024,” Harvard University, Joint Center for Housing Studies (JCHS), February 9, 2026.
35. Riordan Frost, “Five Ways Residential Mobility Has Changed in the Pandemic Era,” Harvard University: Joint Center for Housing Studies (JCHS), March 26, 2025.
36. Mehreen S. Ismail, “Number and Percentage of State-to-State Movers Increased Between 2021 and 2022,” United States Census Bureau, November 21, 2023.