IDEAS home Printed from https://ideas.repec.org/a/taf/specan/v10y2015i2p230-261.html
   My bibliography  Save this article

Growth in a Cross-section of Cities: Location, Increasing Returns or Random Growth?

Author

Listed:
  • Rafael Gonz�lez-Val
  • Jose Olmo

Abstract

This article analyses empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we consider a large database of urban, climatological and macroeconomic data from 1,173 US cities observed in 1990 and 2000. The econometric model is robust to the presence of spatial effects. Our analysis shows the existence of increasing returns and two distinct equilibria in per-capita income and population growth. We also find important differences in the structure of productive activity, unemployment rates and geographical location between cities in low-income and high-income regimes.

Suggested Citation

  • Rafael Gonz�lez-Val & Jose Olmo, 2015. "Growth in a Cross-section of Cities: Location, Increasing Returns or Random Growth?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 10(2), pages 230-261, June.
    • Handle: RePEc:taf:specan:v:10:y:2015:i:2:p:230-261
    DOI: 10.1080/17421772.2015.1023337
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/17421772.2015.1023337
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/17421772.2015.1023337?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pierre‐Philippe Combes & Gilles Duranton & Laurent Gobillon & Diego Puga & Sébastien Roux, 2012. "The Productivity Advantages of Large Cities: Distinguishing Agglomeration From Firm Selection," Econometrica, Econometric Society, vol. 80(6), pages 2543-2594, November.
    2. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
    3. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    4. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    5. Quah, Danny, 1997. "Empirics for growth and distribution," LSE Research Online Documents on Economics 2138, London School of Economics and Political Science, LSE Library.
    6. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    7. Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-384, Oct.-Dec..
    8. Donald R. Davis & David E. Weinstein, 2008. "A Search For Multiple Equilibria In Urban Industrial Structure," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 29-65, February.
    9. Matthew Higgins & Daniel Levy & Andrew T. Young, 2003. "Growth and Convergence across the US: Evidence from County-Level Data," Working Papers 2003-03, Bar-Ilan University, Department of Economics.
    10. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
    11. Beeson, Patricia E. & DeJong, David N. & Troesken, Werner, 2001. "Population growth in U.S. counties, 1840-1990," Regional Science and Urban Economics, Elsevier, vol. 31(6), pages 669-699, November.
    12. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
    13. Hoyt Bleakley & Jeffrey Lin, 2010. "Portage: Path Dependence and Increasing Returns in U.S. History," NBER Working Papers 16314, National Bureau of Economic Research, Inc.
    14. Edward Ludwig Glaeser & Albert Saiz, 2003. "The rise of the skilled city," Working Papers 04-2, Federal Reserve Bank of Philadelphia.
    15. Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
    16. Siqi Zheng & Yuming Fu & Hongyu Liu, 2009. "Demand for Urban Quality of Living in China: Evolution in Compensating Land-Rent and Wage-Rate Differentials," The Journal of Real Estate Finance and Economics, Springer, vol. 38(3), pages 194-213, April.
    17. Simon, Curtis J. & Nardinelli, Clark, 2002. "Human capital and the rise of American cities, 1900-1990," Regional Science and Urban Economics, Elsevier, vol. 32(1), pages 59-96, January.
    18. Higgins, Matthew J. & Levy, Daniel & Young, Andrew T., 2006. "Growth and Convergence across the United States: Evidence from County-Level Data," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 88(4), pages 671-681.
    19. Hansen, Bruce E, 1996. "Inference When a Nuisance Parameter Is Not Identified under the Null Hypothesis," Econometrica, Econometric Society, vol. 64(2), pages 413-430, March.
    20. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 739-767.
    21. Donald R. Davis & David E. Weinstein, 2002. "Bones, Bombs, and Break Points: The Geography of Economic Activity," American Economic Review, American Economic Association, vol. 92(5), pages 1269-1289, December.
    22. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    23. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
    24. Rappaport, Jordan, 2007. "Moving to nice weather," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 375-398, May.
    25. Mitchener, Kris James & McLean, Ian W, 2003. "The Productivity of US States since 1880," Journal of Economic Growth, Springer, vol. 8(1), pages 73-114, March.
    26. Bosker, Maarten & Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2007. "Looking for multiple equilibria when geography matters: German city growth and the WWII shock," Journal of Urban Economics, Elsevier, vol. 61(1), pages 152-169, January.
    27. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    28. Andrews, Donald W K & Ploberger, Werner, 1994. "Optimal Tests When a Nuisance Parameter Is Present Only under the Alternative," Econometrica, Econometric Society, vol. 62(6), pages 1383-1414, November.
    29. Paul Evans, 1997. "How Fast Do Economies Converge?," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 219-225, May.
    30. Evans, Paul & Karras, Georgios, 1996. "Convergence revisited," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 249-265, April.
    31. Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. "Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-378, December.
    32. Danny Quah, 1997. "Empirics for Growth and Distribution," CEP Discussion Papers dp0324, Centre for Economic Performance, LSE.
    33. Hansen Bruce E., 1997. "Inference in TAR Models," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 2(1), pages 1-16, April.
    34. Edward L Glaeser & Jesse M Shapiro, 2003. "Urban Growth in the 1990s: Is City Living Back?," Journal of Regional Science, Wiley Blackwell, vol. 43(1), pages 139-165, February.
    35. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
    36. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
    37. Evans, Paul & Karras, Georgios, 1996. "Do Economies Converge? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 384-388, August.
    38. Quah, Danny T, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," Journal of Economic Growth, Springer, vol. 2(1), pages 27-59, March.
    39. Quah, Danny T, 1996. "Convergence Empirics across Economies with (Some) Capital Mobility," Journal of Economic Growth, Springer, vol. 1(1), pages 95-124, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Esther Vayá & José Ramón García & Joaquim Murillo & Javier Romaní & Jordi Suriñach, 2016. "“Economic Impact of Cruise Activity: The Port of Barcelona”," AQR Working Papers 201609, University of Barcelona, Regional Quantitative Analysis Group, revised Nov 2016.
    2. Mercedes Ayuso & Montserrat Guillen & Jens Perch Nielsen, 2019. "Improving automobile insurance ratemaking using telematics: incorporating mileage and driver behaviour data," Transportation, Springer, vol. 46(3), pages 735-752, June.
    3. Anna Castañer & Mª Mercè Claramunt & Alba Tadeo & Javier Varea, 2016. "Modelización de la dependencia del número de siniestros. Aplicación a Solvencia II," Working Papers XREAP2016-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Sep 2016.
    4. Catalina Bolancé & Zuhair Bahraoui & Ramon Alemany, 2015. "Estimating extreme value cumulative distribution functions using bias-corrected kernel approaches," Working Papers XREAP2015-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Jan 2015.
    5. Anna Castañer & Mª Mercè Claramunt, 2014. "Optimal stop-loss reinsurance: a dependence analysis," Working Papers XREAP2014-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2014.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rafael González-Val & Jose Olmo, 2015. "Growth in a Cross-section of Cities: Location, Increasing Returns or Random Growth?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 10(2), pages 230-261, June.
    2. González-Val, Rafael & Olmo, Jose, 2010. "A Statistical Test of City Growth: Location, Increasing Returns and Random Growth," MPRA Paper 27139, University Library of Munich, Germany.
    3. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    4. Rafael González-Val, 2011. "What makes cities bigger and richer? New Evidence from 1990–2000 in the US," ERSA conference papers ersa11p325, European Regional Science Association.
    5. repec:esx:essedp:729 is not listed on IDEAS
    6. Rafael González-Val, 2015. "Cross-sectional growth in US cities from 1990 to 2000," Journal of Geographical Systems, Springer, vol. 17(1), pages 83-106, January.
    7. Rafael González-Val, 2015. "Cross-sectional growth in US cities from 1990 to 2000," Journal of Geographical Systems, Springer, vol. 17(1), pages 83-106, January.
    8. Park, Seonyoung & Shin, Donggyun, 2020. "Recent Changes in the Nature of Distribution Dynamics of US County Incomes," Working Paper Series 20926, Victoria University of Wellington, School of Economics and Finance.
    9. Park, Seonyoung & Shin, Donggyun, 2020. "Recent Changes in the Nature of Distribution Dynamics of US County Incomes," Working Paper Series 8075, Victoria University of Wellington, School of Economics and Finance.
    10. Young, Andrew T. & Higgins, Matthew J. & Levy, Daniel, 2013. "Heterogeneous Convergence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 120(2), pages 238-241.
    11. Young, Andrew T. & Higgins, Matthew J. & Levy, Daniel, 2008. "Sigma Convergence versus Beta Convergence: Evidence from U.S. County-Level Data," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 40(5), pages 1083-1093.
    12. Luis F. López-Calva & Eduardo Ortiz-Juarez & Carlos Rodríguez-Castelán, 2022. "Within-country poverty convergence: evidence from Mexico," Empirical Economics, Springer, vol. 62(5), pages 2547-2586, May.
    13. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    14. Peretto, Pietro F., 1999. "Industrial development, technological change, and long-run growth," Journal of Development Economics, Elsevier, vol. 59(2), pages 389-417, August.
    15. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    16. Cem Ertur & Julie Le Gallo & Catherine Baumont, 2006. "The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?," International Regional Science Review, , vol. 29(1), pages 3-34, January.
    17. Le Pen, Yannick, 2011. "A pair-wise approach to output convergence between European regions," Economic Modelling, Elsevier, vol. 28(3), pages 955-964, May.
    18. Kurt Geppert & Andreas Stephan, 2008. "Regional disparities in the European Union: Convergence and agglomeration," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 193-217, June.
    19. Gordon Anderson, Alessio Farcomeni, Maria Grazia Pittau and Roberto Zelli, 2019. "Multidimensional Nation Wellbeing, More Equal yet More Polarized: An Analysis of the Progress of Human Development Since 1990," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(1), pages 1-22, March.
    20. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796, Elsevier.
    21. Nicolas Debarsy & Cem Ertur, 2006. "The European Enlargement Process and Regional Convergence Revisited: Spatial Effects Still Matter," ERSA conference papers ersa06p198, European Regional Science Association.

    More about this item

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:specan:v:10:y:2015:i:2:p:230-261. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RSEA20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.