Of course it does.
For the last, oh, eight or so years, journalists and prognosticators have repeatedly tried to sell us the fantasy that where you live and work (read: cities) doesn’t matter. You can telecommute! Broadband puts you instantly in touch! Fed Ex your stuff way out into the wilderness.
The latest of this is Forbes’ 150 Cheap Places to Live, which suggests we should move from our cities to Bend, OR.
Now, this might work during good times. When there is demand for work, businesses are less picky about who and where they hire. But when times get tight, I’m not sure this is the case. There’s still something about a physical connection between people that is very important. Even full video broadcasting is not the same as being in the room with someone. (This is why I fly a lot.) “Out of sight, out of mind” as the saying goes.
Cities also provide chance (and deliberate) connections. Someone you meet at a party or in the park or waiting in line could be your next client or employer or business partner. As lovely as it probably is, you simply aren’t going to get the density of people (and thus the higher chance of connections) remote from your business.
Cities also provide fail-safes. If your business/industry goes bottom up, unless it’s a one-industry town, you’ll have a better chance of finding new work. When the bubble burst, I was able to move from interactive agencies to financial services because I was around New York City. (In systems design, this is called requisite variety: an assortment of responses to deal with a range of situations.) Cities, because of the variety of resources they have and can employ, have more requisite variety.
Cities also carry with them collective learning. If one person doesn’t know how to do something, someone else down the street might.
So anyway, don’t believe the hype. Moving out to the exurbs in the middle of nowhere might save you some money–at the cost of your career.