DP9353 The Settlement of the United States, 1800 to 2000: The Long Transition towards Gibrat's Law
|Author(s):||Klaus Desmet, Jordan Rappaport|
|Publication Date:||February 2013|
|Keyword(s):||Gibrat's law, growth across space, long-term development, settlement of US, spatial distribution of population|
|JEL(s):||N91, N92, O18, R11, R12|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=9353|
Gibrat's law, the orthogonality of growth with initial levels, has long been considered a stylized fact of local population growth. But throughout U.S. history, local population growth has significantly deviated from it. Across small locations, growth was strongly negatively correlated with initial population throughout the nineteenth and early twentieth centuries. This strong convergence gave way to moderate divergence beginning in the mid-twentieth century. Across intermediate and large locations, growth became moderately positively correlated with initial population starting in the late nineteenth century. This divergence eventually dissipated but never completely. A simple-one sector model combining the entry of new locations, a friction from population growth, and a decrease in the congestion arising from the supply of land closely matches these and a number of other evolving empirical relationships.