The Economist‘s Economics Focus column looks at Chinese cities and manages to discuss the distribution of city sizes while avoiding the phrase “Zipf’s law”.
China makes a habit of bending the rules of economics. Do its cities obey the rank-size rule? The fit is not perfect. China’s small cities are too dispersed and its big cities are too even in size…
Messrs Xu and Zhu show that China’s cities became more equal during the 1990s, especially in the first half of the decade…
China’s small cities exploded in number. But its biggest metropolises conspicuously failed to explode in size. As BCG notes, only 27m Chinese live in cities of more than 10m, compared with 58m Indians and 32m Brazilians. Shanghai may have sprouted dozens of skyscrapers and Beijing may boast half a dozen ring roads, but China’s big cities are still surprisingly small.
This partly reflects a conscious policy. Although China’s rulers have embraced urbanisation, they still seem wary of mega-cities…
China’s economy would benefit from a stretching out of the distribution of its cities, argue Ting Jiang of Hong Kong University of Science and Technology and co-authors. But how might such a divergence come about? It might, they speculate, happen as an unintended consequence of the government’s push to expand higher education. Since the bigger cities have the most universities, their expansion will draw youngsters from the hinterland to the metropolis. And with a degree (and a job), their graduates should win permission to stay.
Xu and Zhu, “Urban Growth Determinants in China“, Chinese Economy, 2008.
Hillberry & Hummels “Trade responses to geographic frictions: A decomposition using micro-data” (European Economic Review, 2008):
The highly non-linear effect of distance on trade may help explain some results in the ‘‘home bias’’ literature. While our estimates on 3-digit zip code data reveal that intra-state shipments are significantly higher than cross-state shipments, this effect disappears entirely when shipment distances are measured more accurately using 5-digit zip codes. We instead find that the ‘‘borders’’ between 5-digit zip codes represent a sizeable barrier to trade. We consider these zip-code effects the reductio ad absurdum of the home bias literature. While one can imagine many barriers to trade that operate at national borders, it is harder to conceive of what barriers plausibly operate at state borders, and harder still to imagine those associated with 5-digit zip codes. Our results suggest that ‘‘home bias,’’ at least in state borders, is an artifact of geographic aggregation. Since shipments drop off extraordinarily rapidly over very short distances, attempts to measure border effects on larger geographical groupings are nearly certain to ascribe the non-linear effects of distance to ‘‘home bias’’ dummy variables.
Jacob Goldenberg & Moshe Levy:
while technology has undoubtedly increased the overall level of communication, this increase has been most pronounced for local social ties. We show that the volume of electronic communications is inversely proportional to geographic distance, following a Power Law. We directly study the importance of physical proximity in social interactions by analyzing the spatial dissemination of new baby names. Counter-intuitively, and in line with the above argument, the importance of geographic proximity has dramatically increased with the internet revolution.
Via Free Exchange.
Ed Glaeser is pretty blasé about some intranational trade costs in this paragraph:
The national high-speed rail agenda is being pushed with claims that these trains will jump-start economic growth. No serious evidence supports such claims. When new transportation does affect local economies, it generally does so by moving activity from one place to another, not by creating nationwide benefits.
Better intercity transit shifts economic activity with no gains from economic reorganization? That’s not what economists usually expect from falling trade costs. Professor Glaeser is an expert on economic geography and urban economics, so there’s probably some research or theory behind that claim – I wish he wrote link-filled blog posts rather than Boston Globe columns.
Hat tip: Avent.