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Title: The Settlement of the United States, 1800 to 2000: The Long Transition Towards Gibrat's Law

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: This paper studies the long run spatial development of U.S. counties and metro areas between 1800 and 2000. The well-documented orthogonality between population growth and initial population size - Gibrat's law - emerges only in the late 20th century. Prior to that, there was strong convergence at low population levels, and moderate divergence at high population levels. Convergence arose primarily from the entry of new counties, whereas divergence may have arisen from a decreasing importance of land or an increasing importance of agglomeration economies. Over time, both convergence and divergence greatly attenuate, but even as late as 1980-2000, Gibrat's law can be rejected for the subset of counties and metro areas that entered the system of U.S. locations at a relatively late date. A simple one-sector model successfully approximates these dynamics. Locations differ by their TFP and the date at which they enter the system of locations. Upon entry, a growth friction slows the transition of locations to their steady-state population, thereby inducing convergence. Concurrently, land's factor income share is assumed to decrease over time; equivalently, the elasticity of local TFP with respect population is assumed to increase over time. This lessens the model's only source of congestion thereby inducing divergence. As the system approaches its steady state, population growth becomes increasingly orthogonal to population. Gibrat's law thus emerges as a consequence of attaining a steady state rather than a cause of it.

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Authors: Desmet, Klaus; Rappaport, Jordan

Publisher: Princeton University

Data Collections: IPUMS USA

Topics: Migration and Immigration

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