• Corpus ID: 26244368

Cities , Institutions , and Growth : The Emergence of Zipf ’ s Law

@inproceedings{Dittmar2008CitiesI,
  title={Cities , Institutions , and Growth : The Emergence of Zipf ’ s Law},
  author={Jeremiah Dittmar},
  year={2008}
}

• Jeremiah Dittmar
• Published 2008

Zipf’s Law characterizes city populations as obeying a distributional power law and is supposedly one of the most robust regularities in all of economics. This paper shows, to the contrary, that Zipf’s Law only emerged in Europe between 1500 and 1800. It also shows that Zipf’s Law emerged relatively slowly in Eastern Europe. The explanation I propose has two parts. First, because land and land-intensive intermediates entered city production as quasi-fixed factors, big cities were “too small” before 1500. Then, as trade and rising agricultural productivity relaxed the land constraint, it became possible for big cities to appear and Zipf’s Law to emerge. Second, the institutions of the “second serfdom” in Eastern Europe were associated with delayed emergence. I find that laws limiting labor mobility and sectoral reallocation were associated with two factors that generate persistent deviations from Zipf’s Law: relatively low variation in growth rates and a negative association between city sizes and growth rates (“non-random” growth). These legal institutions were also associated with the loss of several centuries of catchup growth in Eastern European cities – a 1/3 reduction in city growth between 1500 and 1800. This institutionally-driven retardation has not previously been quantified. Taken together, these findings have important implications for how economists think about cities and, more broadly, economic growth. ∗Contact: Department of Economics, American University, 4400 Massachusetts Avenue NW, Washington, DC 20016. Email: [e-mail]. I thank Barry Eichengreen, Chad Jones, Christina Romer, Brad DeLong, Xavier Gabaix, Suresh Naidu, and seminar participants at UC Berkeley, UC Davis, Dartmouth, UBC, and American for comments and suggestions. The errors are mine.