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Title: The Settlement of the U.S., 1790 to 2000: The Emergence of Gibrat's Law

Citation Type: Miscellaneous

Publication Year: 2011

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Abstract: This paper studies the long run spatial development of U.S. counties and metro areas between 1790 and 2000. The often-documented orthogonality between population growth and initial population size - Gibrat's law - only emerges recently. Between 1790 and 1940 population growth tends to be decreasing with county population, except among the largest counties, for which population growth is slightlyincreasing with county population. The negative correlation between size and growth among small locations is largely driven by the entry of new counties, and dissipates after 1940. Over time the relation between size and growth flattens, though it is only for the subgroup of counties that entered long ago that Gibrat's law cannot be rejected in recent years. A simple one-sector model successfully approximates this evolving distribution of local population. Locations diff er by a permanent TFP parameter and a date of entry into the aggregate economy. Upon entry, an assumed friction slows the transition of locations'populations to their steady-state levels. Gibrat's law emerges as the system of locations approaches its steady state.

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Authors: Rappaport, Jordan; Desmet, Klaus

Publisher: Banco de Espaa

Data Collections: IPUMS USA

Topics: Other

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