Growth in a Cross-Section of Cities: Location, Increasing Returns or Random Growth?

González-Val, Rafael and Olmo, Jose (2014): Growth in a Cross-Section of Cities: Location, Increasing Returns or Random Growth?

Abstract

This article analyses empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we consider a large database of urban, climatological and macroeconomic data from 1,173 US cities observed in 1990 and 2000. The econometric model is robust to the presence of spatial effects. Our analysis shows the existence of increasing returns and two distinct equilibria in per-capita income and population growth. We also find important differences in the structure of productive activity, unemployment rates and geographical location between cities in low income and high income regimes.

• Item Type: MPRA Paper
• Language: English
• Keywords: threshold nonlinearity test; locational fundamentals; multiple equilibria; random growth
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R0 - General > R00 - General; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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