1. Ades, A. F. and Glaeser, E. L. (1995) “Trade and Circuses: Explaining Urban Giants,” The Quarterly Journal of Economics, 110(1), pp. 195–227. Available at: Link.
    • Abstract

      Using theory, case studies, and cross-country evidence, we investigate the factors behind the concentration of a nation’s urban population in a single city. High tariffs, high costs of internal trade, and low levels of international trade increase the degree of concentration. Even more clearly, politics (such as the degree of instability) determines urban primacy. Dictatorships have central cities that are, on average, 50 percent larger than their democratic counterparts. Using information about the timing of city growth, and a series of instruments, we conclude that the predominant causality is from political factors to urban concentration, not from concentration to political change.

  2. Au, C.-C. and Henderson, V. (2006) “How Migration Restrictions Limit Agglomeration and Productivity in China,” Journal of Development Economics, 80(2), pp. 350–388.
    • Abstract

      China strongly restricts rural-rural, urban-urban, and rural-urban migration. The result which this paper documents is a surplus of labor in agriculture. However, the paper argues that these restrictions also lead to insufficient agglomeration of economic activity within both rural industrial and urban areas, with resulting first order losses in GDP. For urban areas the paper estimates a city productivity relationship, based on city GDP numbers for 1990-97. The effects of access, educational attainment, FDI, and public infrastructure on productivity are estimated. Worker productivity is shown to be an inverted U-shape function of city employment level, with the peak point shifting out as industrial composition moves from manufacturing to services. As far as we know this is the first paper to actually estimate the relationship between output per worker and city scale, as it varies with industrial composition. The majority of Chinese cities are shown to be potentially undersized - below the lower bound on the 95% confidence interval about the size where their output per worker peaks. The paper calculates the large gains from increased agglomeration in both the rural industrial and urban sectors. It also examines the effect of capital reallocations, where the rural sector is grossly undercapitalized.

  3. Bairoch, P. (1988) Cities and Economic Development: Frow the Dawn of History to the Present. Chicago: The University of Chicago Press.
  4. Bates, R. (1981) Markets and States in Tropical Africa: The Political Basis of Agricultural Policies. Berkeley: University of California Press.
  5. Bleakley, H. and Lin, J. (2015) History and the sizes of cities. Working Papers 15-6. Federal Reserve Bank of Philadelphia. Available at: Link.
    • Abstract

      We contrast evidence of urban path dependence with efforts to analyze calibrated models of city sizes. Recent evidence of persistent city sizes following the obsolescence of historical advantages suggests that path dependence cannot be understood as the medium-run effect of legacy capital but instead as the long-run effect of equilibrium selection. In contrast, a different, recent literature uses stylized models in which fundamentals uniquely determine city size. We show that a commonly used model is inconsistent with evidence of long-run persistence in city sizes and propose several modifications that might allow for multiplicity and thus historical path dependence.

  6. Chandler, T. (1987) Four Thousand Years of Urban Growth: An Historical Census. The Edwin Mellen Press.
  7. Christiaensen, L. and Todo, Y. (2014) “Poverty Reduction During the Rural–Urban Transformation – The Role of the Missing Middle,” World Development, 63, pp. 43–58. doi: Link.
    • Abstract

      Summary As countries develop, they restructure away from agriculture and urbanize. But structural transformation and urbanization patterns differ substantially, with some countries fostering migration out of agriculture into rural off farm activities and secondary towns, and others undergoing rapid agglomeration in mega cities. Using cross-country panel data for developing countries spanning 1980–2004, it is found that migration out of agriculture into the missing middle (rural nonfarm economy and secondary towns) yields more inclusive growth patterns and faster poverty reduction than agglomeration in mega cities. This suggests that patterns of urbanization deserve much more attention when striving for faster poverty reduction.

  8. Combes, P.-P. et al. (2012) “The Productivity Advantages of Large Cities: Distinguishing Agglomeration From Firm Selection,” Econometrica, 80(6), pp. 2543–2594. Available at: Link.
    • Abstract

      Firms are more productive on average in larger cities. Two explanations have been offered: agglomeration economies (larger cities promote interactions that increase productivity) and firm selection (larger cities toughen competition allowing only the most productive to survive). To distinguish between them, we nest a generalised version of a seminal firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. We assess the relative importance of agglomeration and firm selection using French establishment-level data and a new quantile approach. Spatial productivity differences in France are mostly explained by agglomeration.

      (This abstract was borrowed from another version of this item.)

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    • Desmet, K. and Rossi-Hansberg, E. (2014) “Spatial Development,” American Economic Review, 104(4), pp. 1211–1243. Available at: Link.
      • Abstract

        We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially. We apply the model to study the evolution of the US economy in the last half-century and find that it can generate the reduction in the manufacturing employment share, the increased spatial concentration of services, the growth in service productivity starting in the mid-1990s, the rise in the dispersion of land rents in the same period, as well as several other spatial and temporal patterns.

    • Dincecco, M. and Onorato, M. G. (2013) Military Conflict and the Rise of Urban Europe. Working Papers 7/2013. IMT Institute for Advanced Studies Lucca. Available at: Link.
      • Abstract

        We present new evidence about the relationship between military conflict and city population growth in Europe from the fall of Charlemagne’s empire to the start of the Industrial Revolution. Military conflict was a main feature of European history. We argue that cities were safe harbors from conflict threats. To test this argument, we construct a novel database that geocodes the locations of 1,091 conflicts and 676 cities between 800 and 1799. We find a significant, positive, and robust relationship that runs from conflict exposure to city population growth. Our analysis suggests that military conflict played a key role in the rise of urban Europe.

    • Dorosh, P. and Thurlow, J. (2014) “Can Cities or Towns Drive African Development? Economywide Analysis for Ethiopia and Uganda,” World Development, 63, pp. 113–123. doi: Link.
      • Abstract

        Summary Rapid urbanization is an important characteristic of African development and yet the structural transformation debate focuses on agriculture’s relative merits without also considering the benefits from urban agglomeration. As a result, African governments are often provided conflicting recommendations on the importance of rural agriculture or urban industry. We develop dynamic economywide models for Ethiopia and Uganda that capture both traditional aspects of the debate (growth linkages and foreign trade) and benefits from urbanization (internal migration and agglomeration effects). Simulations suggest that urban agglomeration is an important source of long-term growth and structural transformation, but that investing in cities does not greatly reduce national poverty over the short-term. In this regard, agricultural growth is more effective, albeit with slower national growth. Given these trade-offs, we conclude that, while urbanization’s benefits argue against an “agro-fundamentalist” approach to African development, the short-term imperative of reducing poverty necessitates further agricultural investment.

    • Glaeser, E. (2011) Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. London, UK: Penguin Press.
    • Glaeser, E. L. and Gottlieb, J. D. (2009) “The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States,” Journal of Economic Literature, 47(4), pp. 983–1028. Available at: Link.
    • Gollin, D., Jedwab, R. and Vollrath, D. (2016) “Urbanization with and without industrialization,” Journal of Economic Growth, 21(1), pp. 35–70. Available at: Link.   Paper
      • Abstract

        We document a strong positive relationship between natural resource exports and urbanization in a sample of 116 developing nations over the period 1960–2010. In countries that are heavily dependent on resource exports, urbanization appears to be concentrated in “consumption cities” where the economies consist primarily of non-tradable services. These contrast with “production cities” that are more dependent on manufacturing in countries that have industrialized. Consumption cities in resource exporters also appear to perform worse along several measures of welfare. We offer a simple model of structural change that can explain the observed patterns of urbanization and the associated differences in city types. We note that although the development literature often assumes that urbanization is synonymous with industrialization, patterns differ markedly across developing countries. We discuss several possible implications for policy.

    • Greenstone, M., Hornbeck, R. and Moretti, E. (2010) “Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings,” Journal of Political Economy, 118(3), pp. 536–598. Available at: Link.
      • Abstract

        We quantify agglomeration spillovers by comparing changes in total factor productivity (TFP) among incumbent plants in "winning" counties that attracted a large manufacturing plant and "losing" counties that were the new plant’s runner-up choice. Winning and losing counties have similar trends in TFP prior to the new plant opening. Five years after the opening, incumbent plants’ TFP is 12 percent higher in winning counties. This productivity spillover is larger for plants sharing similar labor and technology pools with the new plant. Consistent with spatial equilibrium models, labor costs increase in winning counties, indicating that profits ultimately increase less than productivity. (c) 2010 by The University of Chicago. All rights reserved..

    • Henderson, J. V. et al. (2016) The Global Spatial Distribution of Economic Activity: Nature, History, and the Role of Trade. NBER Working Papers 22145. National Bureau of Economic Research, Inc. Available at: Link.
      • Abstract

        We study the distribution of economic activity, as proxied by lights at night, across 250,000 grid cells of average area 560 square kilometers. We first document that nearly half of the variation can be explained by a parsimonious set of physical geography attributes. A full set of country indicators only explains a further 10%. When we divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, we find that the agriculture variables have relatively more explanatory power in countries that developed early and the trade variables have relatively more in countries that developed late, despite the fact that the latter group of countries are far more dependent on agriculture today. We explain this apparent puzzle in a model in which two technological shocks occur, one increasing agricultural productivity and the other decreasing transportation costs, and in which agglomeration economies lead to persistence in urban locations. In countries that developed early, structural transformation due to rising agricultural productivity began at a time when transport costs were still relatively high, so urban agglomerations were localized in agricultural regions. When transport costs fell, these local agglomerations persisted. In late developing countries, transport costs fell well before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. With structural transformation, these initial coastal locations grew, without formation of more cities in the agricultural interior.

    • Hicks, J. H. et al. (2017) Reevaluating Agricultural Productivity Gaps with Longitudinal Microdata. Working Paper 23253. National Bureau of Economic Research. doi: 10.3386/w23253.
      • Abstract

        Recent research has pointed to large gaps in labor productivity between the agricultural and non-agricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of micro-survey data, and as a result typically struggle to account for individual selection between sectors. This paper contributes to this literature using long-run individual-level panel data from two low-income countries (Indonesia and Kenya). Accounting for individual fixed effects leads to much smaller estimated productivity gains from moving into the non-agricultural sector (or urban areas), reducing estimated gaps by over 80 percent. Per capita consumption gaps between non-agricultural and agricultural sectors, as well as between urban and rural areas, are also close to zero once individual fixed effects are included. Estimated productivity gaps do not emerge up to five years after a move between sectors, nor are they larger in big cities. We evaluate whether these findings imply a re-assessment of the current conventional wisdom regarding sectoral gaps, discuss how to reconcile them with existing cross-sectional estimates, and consider implications for the desirability of sectoral reallocation of labor.

    • Hoselitz, B. F. (1955) “Generative and Parasitic Cities,” Economic Development and Cultural Change. The University of Chicago Press, 3(3), pp. pp. 278–294.
    • Hoselitz, B. F. (1953) “The Role of Cities in the Economic Growth of Underdeveloped Countries,” Journal of Political Economy, 61, p. 195. Available at: Link.
      • Abstract

        No abstract is available for this item.

    • Jedwab, R. and Vollrath, D. (2018) “The Urban Mortality Transition and Poor Country Urbanization,” American Economic Journal: Macroeconomics.   Paper
      • Abstract

        Today the world’s fastest-growing cities lie in low-income countries, unlike the historical norm. Also unlike the “killer cities” of history, cities in low-income countries grow not just through in-migration but also through their own natural increase. First, we use novel historical data to document that many poor countries urbanized at the same time as the post-war urban mortality transition. Second, we develop a general equilibrium model of location choice with heterogeneity in demographics and congestion costs across locations to account for this. In the model, people prefer to live in low-mortality locations, and the aggregate rate of population growth and the locational choice of individuals interact. Third, we calibrate the model to data from a sample of poor countries, and find that informal urban areas (e.g. slums) grew in large part because they were able to absorb additional population relatively more easily than other locations. We show that between 1950 and 2005 the urban mortality transition by itself could have doubled the urbanization rate as well as the size of informal urban areas in this sample. Of these effects, one-third can be attributed to the direct amenity effect of lower urban mortality rates, while the remainder is due to higher population growth disproportionately pushing people into informal urban areas. Fourth, policy analysis suggests that family planning programs might be as effective as urban infrastructure and institution at transforming cities in poor countries into “engines of growth”

    • Jedwab, R. and Vollrath, D. (2015) “Urbanization without growth in historical perspective,” Explorations in Economic History, 58(C), pp. 1–21. Available at: Link.   Paper   Data
      • Abstract

        The world is becoming more and more urbanized at every income level, and there has been a dramatic increase in the number of mega-cities in the developing world. This has led scholars to believe that development and urbanization are not always correlated, either across space or over time. In this paper, we use historical data at both the country level and city level over the five centuries between 1500–2010 to revisit the topic of “urbanization without growth” (Fay and Opal, 2000). In particular, we first establish that, although urbanization and income remain highly correlated within any given year, urbanization is 25–30 percentage points higher in 2010 than in 1500 at every level of income per capita. Second, while historically this shift in urbanization rates was more noticeable at the upper tail of the income distribution, i.e. for richer countries, it is now particularly visible at the lower tail, i.e. for poorer countries. Third, these patterns suggest that different factors may have explained the shift in different periods of time. We use the discussion of these factors as an opportunity to provide a survey of the literature and summarize our knowledge of what drives the urbanization process over time.

    • Kim, S. (2005) “Industrialization and urbanization: Did the steam engine contribute to the growth of cities in the United States?,” Explorations in Economic History, 42(4), pp. 586–598. Available at: Link.
      • Abstract

        Industrialization and urbanization are seen as interdependent processes of modern economic development. However, the exact nature of their causal relationship is still open to considerable debate. This paper uses firm-level data from the manuscripts of the decennial censuses between 1850 and 1880 to examine whether the adoption of the steam engine as the primary power source by manufacturers during industrialization contributed to urbanization. While the data indicate that steam-powered firms were more likely to locate in urban areas than water-powered firms, the adoption of the steam engine did not contribute substantially to urbanization.

    • Lipton, M. (1977) Why Poor People Stay Poor: Urban Bias in World Development. Cambridge: Harvard University Press.
    • Michaels, G., Rauch, F. and Redding, S. J. (2012) “Urbanization and Structural Transformation,” The Quarterly Journal of Economics, 127(2), pp. 535–586. Available at: Link.
      • Abstract

        We examine urbanization using new data that allow us to track the evolution of population in rural and urban areas in the United States from 1880 to 2000. We find a positive correlation between initial population density and subsequent population growth for intermediate densities, which increases the dispersion of the population density distribution over time. We use theory and empirical evidence to show this pattern of population growth is the result of differences in agriculture’s initial share of employment across population densities, combined with structural transformation that shifts employment away from agriculture. Copyright 2012, Oxford University Press.

    • Pirenne, H. (1925) Medieval cities, their Origins, and the Revival of Trade. Princeton, NJ.
    • Roback, J. (1988) “Wages, Rents, and Amenities: Differences among Workers and Regions,” Economic Inquiry, 26(1), pp. 23–41. Available at: Link.
      • Abstract

        What explains persistent regional earnings differences? This paper argues that regional differences in amenities can account for the wage differences; in contrast, cost-of-living variations do not account for wage differences, but actually exacerbate them. This conclusion results from a model in which variations in rents and wages are equalizing differences for amenity differences. Empirical results are consistent with the model. The model also extends previous work by considering two types of workers instead of a homogeneous work force. The wages of one type of worker prove to be dependent on the preferences of the other type. Copyright 1988 by Oxford University Press.

    • Roback, J. (1982) “Wages, Rents, and the Quality of Life,” Journal of Political Economy, 90(6), pp. 1257–78. Available at: Link.
      • Abstract

        No abstract is available for this item.

    • Williamson, J. (1990) Coping with City Growth During the British Industrial Revolution. Cambridge: Cambridge University Press.
    • Brauw, A. de, Mueller, V. and Lee, H. L. (2014) “The Role of Rural–Urban Migration in the Structural Transformation of Sub-Saharan Africa,” World Development, 63, pp. 33–42. doi: Link.
      • Abstract

        Summary Rural-to-urban migration is an inherent part of the economic development process, yet it is relatively understudied in sub-Saharan Africa. In this paper, we attempt to describe the present state of rural–urban migration from several different angles. Migration rates are quite low in several countries, despite the fact that large proportions of populations continue to reside in rural areas, and that there are clearly several types of gains to migration. We offer a number of possible explanations for low migration rates. We make recommendations for improvements in research on rural–urban migration and migration policy in Africa.

    • Vries, J. de (1984) European Urbanization. London: Methuen.
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