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The Optimal Distribution of Population across Cities

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  • David Albouy
  • Kristian Behrens
  • Frédéric Robert-Nicoud
  • Nathan Seegert

Abstract

The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantial when local governments control city size.

Suggested Citation

  • David Albouy & Kristian Behrens & Frédéric Robert-Nicoud & Nathan Seegert, 2016. "The Optimal Distribution of Population across Cities," NBER Working Papers 22823, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22823
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    3. Sergey Kichko, 0. "Competition, land prices and city size," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1313-1329.
    4. Kristian Behrens, 2016. "Agglomeration and clusters: Tools and insights from coagglomeration patterns," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1293-1339, November.
    5. Cecile Gaubert, 2018. "Firm Sorting and Agglomeration," NBER Working Papers 24478, National Bureau of Economic Research, Inc.
    6. Andrii Parkhomenko, 2018. "The Rise of Housing Supply Regulation in the US: Local Causes and Aggregate Implications," 2018 Meeting Papers 275, Society for Economic Dynamics.
    7. Gabriel Loumeau, 2020. "Metropolitan Structures," KOF Working papers 20-473, KOF Swiss Economic Institute, ETH Zurich.
    8. Pflüger, Michael P., 2018. "City Size, Pollution and Emission Policies," IZA Discussion Papers 11354, Institute of Labor Economics (IZA).
    9. Duranton, Gilles & Puga, Diego, 2019. "Urban growth and its aggregate implications," CEPR Discussion Papers 14215, C.E.P.R. Discussion Papers.
    10. Daidai Shen & Jean-Claude Thill & Jiuwen Sun, 2020. "Are Chinese Cities Oversized?," International Regional Science Review, , vol. 43(6), pages 632-654, November.
    11. Alexander D. Rothenberg & Samuel Bazzi & Shanthi Nataraj & Amalavoyal V. Chari, 2017. "When Regional Policies Fail An Evaluation of Indonesia's Integrated Economic Development Zones," Working Papers WR-1183, RAND Corporation.
    12. Gabriel Loumeau, 2021. "Locating Public Facilities: Theory and Micro Evidence from Paris," CESifo Working Paper Series 8908, CESifo.
    13. Leonid V. Azarnert, 2021. "Population Sorting and Human Capital Accumulation," CESifo Working Paper Series 9338, CESifo.
    14. Calin Arcalean & Gerhard Glomm & Ioana Cosmina Schiopu, 2019. "Urbanization, productivity differences and spatial frictions," CESifo Working Paper Series 7609, CESifo.
    15. Daniele Coen‐Pirani, 2021. "Geographic Mobility And Redistribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 921-952, August.
    16. Taner Osman, 2020. "Restrictive Land Use Regulations and Economic Performance," International Regional Science Review, , vol. 43(4), pages 291-315, July.
    17. Robert Buckley & Ashna Mathema, 2018. "Housing privatization in Romania : An Anti†commons tragedy?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(1), pages 127-145, January.
    18. Pflüger, Michael & Tabuchi, Takatoshi, 2019. "Comparative advantage, agglomeration economies and trade costs," Journal of Urban Economics, Elsevier, vol. 109(C), pages 1-13.
    19. James R. Fain, 2017. "City formation with complex landscapes," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 24(4), pages 125-137, October.
    20. Gaubert, Cécile, 2018. "Firm Sorting and Agglomeration," CEPR Discussion Papers 12835, C.E.P.R. Discussion Papers.
    21. Michael Pflüger, 2020. "City Size, Pollution and Emission Policies," CESifo Working Paper Series 8448, CESifo.

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    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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