Governments should stop trying to shift knowledge-intensive jobs to the outer suburbs and concentrate on making it easier for people to live closer to where the jobs are, according to a new report.

The Productive Cities report argues knowledge-intensive industries function better and choose to locate in central locations close to other knowledge-intensive industries. The proximity makes it easier to collaborate and increases the pool of available employees, increasing the likelihood of matching the right person to the job, according to the report by public policy think tank the Grattan Institute.

Collaboration and pooling within the CBD is key, report says. Credit:Rebecca Hallas

The co-location of similar firms enhances the transfer of skills and innovation and can lead to ''knowledge spillovers'', the report said.

''When people say things like we need to move the knowledge-intensive jobs from the CBD to the suburbs, that just doesn't work, it is not how the economy works,'' Grattan cities program director Jane-Frances Kelly said.