From Neighborhoods to Nations: The Economics of Social Interactions

By Yannis M. Ioannides | Go to book overview

CHAPTER 8
Empirics of the Urban Structure and
Its Evolution

8.1 INTRODUCTION

The extraordinary revival of interest in economic geography and urban economics that the economics literature has been experiencing has also registered an empirical presence.1 A notable portion of this interest pertains to Zipf’s law for city sizes. Some of the motivation for this surge in interest comes from scholars who see Zipf’s law as an instance of a broader class of phenomena, many of which have been studied by physicists as well as other scientists.

Zipf’s (1949) law for cities, an alleged empirical regularity that has become of considerable interest to researchers, is arguably one of the best known empirical facts in economics. In its strict version, which is also known as the rank-size rule, the law states that the second largest city is one-half the size of the largest, the third largest city is one-third the size of the largest, and so on. For instance, take the United States and order its cities by size, measured by population: New York as the largest has rank 1, and Los Angeles as the second largest has rank 2. The rank-size rule predicts that the product of each city’s size times its rank is equal to a constant across all cities in an urban system.2 Duranton (2007) refers succinctly to a broader set of empirical regularities: one, a stationary law for city size distributions that is skewed to the right, the still; two, churning of industries across cities as cities experience rapid changes in their industrial compositions, the fast; and, three, the pattern of urban size transitions, the slow. I take up these issues in turn. I start with Zipf’s law and the vibrant exchanges both over theory and empirics pertaining to it. I then show that similar issues arise with different ways of measuring urban concentrations, including population densities over space. After I present the work of Duranton (2007), whose parsimonious model explains all three empirical regularities, I turn to the empirics of urban transitions by discussing models of urban evolution that allow for general intradistributional dependence. Such models are helpful in contemplating issues of resilience of urban systems to shocks. I discuss the U.S. experience in more detail.

The latest literature on the urban structure has a more macroeconomic flavor, seeking to establish properties of the entire urban structure in general

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