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The settlement of the United States, 1800 to 2000: the long transition towards Gibrat's law

  • Klaus Desmet
  • Jordan Rappaport

A prominent strand of economic literature argues that population growth rates across locations areas are uncorrelated with the population levels of those locations (“Gibrat’s Law”). Such uncorrelated growth, it is argued, can account for the current distribution of population across locations. This paper shows that, on the contrary, locations’ population growth throughout U.S. history has always been highly correlated with their initial population levels. Throughout the entire 19th century and the early 20th century, low-population locations tended to grow faster than intermediate-population locations, thereby causing the distribution of population to become more compressed. Throughout the second half of the 19th century and the entire 20th century, population growth among the highest-population locations was faster than population growth among intermediate-population locations, thereby causing the distribution of population to become more dispersed. ; This pattern of population growth is driven by two separate forces. First is the “entry” of new locations into the United States as the country spread westward. These locations typically entered with a low population after which many of them gradually transitioned up to much larger ones. Such transitions can account for the faster growth of low population locations. Second, the congestion arising from limited supplies of land within any given location may have eased over time. This may have occurred, for example, with the technology-driven move by workers from agriculture to manufacturing and services. Such a shift would cause high-population places to grow faster. ; Understanding historical population growth across locations gives insight into near-future population growth. For example, since 2000 population growth in larger locations (though not necessarily the very largest) has tended to outpace population growth in intermediate and smaller locations. This suggests that ongoing technological change may be continuing to relieve the “congestion” associated with living in large metro areas while increasing the disadvantages of living in small locations. Rapid advances in information technology are a possible source of such technological change.

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Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 13-02.

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Date of creation: 2013
Date of revision:
Handle: RePEc:fip:fedkrw:rwp13-02
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