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Gibrat’s Law for Cities Revisited

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  • Rafael Gonz√°lez-Val
  • Luis Lanaspa
  • Fernando Sanz

Abstract

The aim of this work is to test empirically the validity of Gibrat’s Law in the growth of cities, using data for all the twentieth century of the complete distribution of cities (without any size restrictions) in three countries: the US, Spain and Italy. For this we use different techniques (parametric and non-parametric methods), obtaining mixed evidence. Our results confirm that Gibrat’s law for means holds only as a long-run average. In the short term, considered decade by decade, we find that growth was divergent in all three countries. Despite this, the distribution of growth in the cities can be approached as a lognormal. In the long term, panel data unit root tests confirm the validity of Gibrat’s Law in the upper tail distribution. Finally we find evidence in favour of a weak Gibrat's Law (size affects the variance of the growth process but not its mean) when using non-parametric methods which relate the growth rate to city size.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p199.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa10p199

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  1. Jan Eeckhout, 2004. "Gibrat's Law for (All) Cities," American Economic Review, American Economic Association, vol. 94(5), pages 1429-1451, December.
  2. Rafael González‐Val, 2010. "The Evolution Of U.S. City Size Distribution From A Long‐Term Perspective (1900–2000)," Journal of Regional Science, Wiley Blackwell, vol. 50(5), pages 952-972, December.
  3. 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.
  4. Xavier Gabaix & Yannis M. Ioannides, 2003. "The Evolution of City Size Distributions," Discussion Papers Series, Department of Economics, Tufts University 0310, Department of Economics, Tufts University.
  5. Anderson, Gordon & Ge, Ying, 2005. "The size distribution of Chinese cities," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 756-776, November.
  6. Henderson, J. Vernon & Wang, Hyoung Gun, 2007. "Urbanization and city growth: The role of institutions," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 283-313, May.
  7. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
  8. Steven Brakman & Harry Garretsen & Marc Schramm, 2002. "The Strategic Bombing of German Cities during World War II and its Impact on City Growth," CESifo Working Paper Series 808, CESifo Group Munich.
  9. Banerjee, Anindya & Massimiliano Marcellino & Chiara Osbat, 2002. "Testing for PPP: Should We Use Panel Methods?," Royal Economic Society Annual Conference 2002 13, Royal Economic Society.
  10. Paul Cheshire & Stefano Magrini, 2006. "Population growth in European cities: Weather matters - but only nationally," Regional Studies, Taylor & Francis Journals, vol. 40(1), pages 23-37.
  11. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  12. Glaeser, Edward L. & Shapiro, Jesse M., 2002. "Cities and Warfare: The Impact of Terrorism on Urban Form," Journal of Urban Economics, Elsevier, vol. 51(2), pages 205-224, March.
  13. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
  14. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
  15. Jan Eeckhout, 2009. "Gibrat's Law for (All) Cities: Reply," American Economic Review, American Economic Association, vol. 99(4), pages 1676-83, September.
  16. Gilles Duranton, 2007. "Urban Evolutions: The Fast, the Slow, and the Still," American Economic Review, American Economic Association, vol. 97(1), pages 197-221, March.
  17. Duncan Black & Vernon Henderson, 2003. "Urban evolution in the USA," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 343-372, October.
  18. Bosker, Maarten & Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2008. "A century of shocks: The evolution of the German city size distribution 1925-1999," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 330-347, July.
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