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

Rafael González-Val and Jose Olmo

No XREAP2011-21, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

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: 47 pages
Date: 2011-12, Revised 2011-12
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-21.pdf First version, 2011 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-21.pdf Revised version, 2011 (application/pdf)

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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