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What is Different about Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States

Juan Chauvin, Edward Glaeser, Yueran Ma and Kristina Tobio
Additional contact information
Edward Glaeser: Harvard University and NBER
Yueran Ma: Harvard University
Kristina Tobio: Harvard University

No 2016.03, Working Papers from International Network for Economic Research - INFER

Abstract: Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with analogous geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is more modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.

Keywords: Urbanization; developing countries; spatial equilibrium; agglomeration economies; human capital externalities (search for similar items in EconPapers)
Pages: 68 pages
Date: 2016
New Economics Papers: this item is included in nep-cna, nep-geo, nep-lam, nep-ltv and nep-ure
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Journal Article: What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States (2017) Downloads
Working Paper: What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States (2016) Downloads
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