Urbanization and Structural Transformation

Abstract

This paper presents new evidence on urbanization using sub-county data for the United States from 1880-2000 and municipality data for Brazil from 1970-2000. We show that the two central stylized features of population growth for cities -Gibrat's Law and a stable population distribution -are strongly rejected when both rural and urban areas are considered. Population growth exhibits a U-shaped relationship with initial population density, and only becomes uncorrelated with initial population density at the high densities found in predominantly urban areas. We provide evidence that the explanation for these patterns lies in different employment growth dynamics in the agricultural and non-agricultural sectors and the process of structural transformation away from the agricultural sector.

Regional Growth and Regional Decline

“…Henderson and Wang (2005) construct a model of the rural-urban transformation which draws on dual economy ideas, but extended to consider the endogenous evolution of distinct cities, and allowing the formation of new cities. Michaels et al (2012) study the US evolution of populations in rural and urban areas from 1880 to 2000, explaining the observed patterns partly in terms of structural transformation.…”

Goods Trade, Factor Mobility and Welfare

“…Given data on only population (L n ) and trade shares (π nn ), the population mobility condition (31) can be again used to measure unobserved locational fundamentals, which permits a model-based decomposition of the variance of population across locations into the contributions of locational fundamentals, market access and their covariance.…”

“…Our research is also related to the economic geography literature following Krugman (1991a,b), including in particular research based on the Helpman (1998) model such as Michaels et al (2012), Hanson (2005) and Redding and Sturm (2011). 1 While the theoretical literature on economic geography has uncovered the mechanisms underlying the agglomeration of economic activity, there has been little research developing quantitative versions of these models, partly because of their complexity which often restricts the analysis to a small number of symmetric regions.…”

Agglomeration Theory with Heterogeneous Agents

“…The latter has been challenged lately on empirical grounds (see Michaels et al, 2012). Desmet and Rappaport (2013) show that Gibrat's law appears to settle once the distribution is of the Zipf type (and not the other way round).…”