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Gibrat's Law for (All) Cities*

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  • Jan Eeckhout

Abstract

Two empirical regularities concerning the size distribution of cities have repeatedly been established: Zipf's law holds (the upper tail is Pareto), and city growth is proportionate. Census 2000 data are used covering the entire size distribution, not just the upper tail. The nontruncated distribution is shown to be lognormal, rather than Pareto. This provides a simple justification for the coexistence of proportionate growth and the resulting lognormal distribution. An equilibrium theory of local externalities that can explain the empirical size distribution of cities is proposed. The driving force is a random productivity process of local economies and the perfect mobility of workers.

Suggested Citation

  • Jan Eeckhout, 2004. "Gibrat's Law for (All) Cities," American Economic Review, American Economic Association, vol. 94(5), pages 1429-1451, December.
  • Handle: RePEc:aea:aecrev:v:94:y:2004:i:5:p:1429-1451
    Note: DOI: 10.1257/0002828043052303
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    References listed on IDEAS

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    Replication

    This item has been replicated by:
  • Moshe Levy, 2009. "Gibrat's Law for (All) Cities: Comment," American Economic Review, American Economic Association, vol. 99(4), pages 1672-1675, September.
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