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What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States

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  • Juan Pablo Chauvin
  • Edward Glaeser
  • Yueran Ma
  • Kristina Tobio

Abstract

Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with comparable geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that the spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.

Suggested Citation

  • Juan Pablo Chauvin & Edward Glaeser & Yueran Ma & Kristina Tobio, 2016. "What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States," NBER Working Papers 22002, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22002
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    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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