What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States

62 Pages Posted: 22 Feb 2016 Last revised: 13 Feb 2022

See all articles by Juan Pablo Chauvin

Juan Pablo Chauvin

Harvard University

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Yueran Ma

University of Chicago - Booth School of Business

Kristina Tobio

Harvard University - Business School (HBS)

Date Written: February 2016

Abstract

Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with comparable geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that the spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.

Suggested Citation

Chauvin, Juan Pablo and Glaeser, Edward L. and Ma, Yueran and Tobio, Kristina, What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States (February 2016). NBER Working Paper No. w22002, Available at SSRN: https://ssrn.com/abstract=2736078

Juan Pablo Chauvin (Contact Author)

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Yueran Ma

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Kristina Tobio

Harvard University - Business School (HBS) ( email )

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