Growth in a cross-section of cities: location, increasing returns or random growth?

No 2011/39, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: This article analyzes empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we implement a threshold nonlinearity test that extends standard linear growth regression models to a dataset on urban, climatological and macroeconomic variables on 1,175 U.S. cities. Our analysis reveals the existence of increasing returns when per-capita income levels are beyond $19; 264. Despite this, income growth is mostly explained by social and locational fundamentals. Population growth also exhibits two distinct equilibria determined by a threshold value of 116,300 inhabitants beyond which city population grows at a higher rate. Income and population growth do not go hand in hand, implying an optimal level of population beyond which income growth stagnates or deteriorates.

Keywords: Threshold nonlinearity test; locational fundamentals; multiple equilibria; random growth (search for similar items in EconPapers)
JEL-codes: C12 C13 C33 O1 R0 R11 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011
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Related works:
Journal Article: Growth in a Cross-section of Cities: Location, Increasing Returns or Random Growth? (2015)
Working Paper: Growth in a Cross-Section of Cities: Location, Increasing Returns or Random Growth? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2011-39

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