Gibrat's Law for (All) Cities: Reply
American Economic Review · 2009 · Volume 99 · Issue 4
Abstract
This reply refutes the objection raised by Levy (2009) about the fit of the upper tail of the city size distribution in Eeckhout (2004). I show that the method on which his conclusion is based is unsubstantiated. The visual interpretation of the fit on log-log plots is misleading. In addition, the methodology used to estimate a truncated subsample of the distribution while testing its significance against a distribution with prespecified parameters is ill-founded. The main conclusion is that Gibrat's law holds: city sizes follow proportionate growth, thus giving rise to a lognormal size distribution, tail included. (JEL R11, R12, R23)
Keywords
Regional Economic Activity: Growth, Development, and Changes, Size and Spatial Distributions of Regional Economic Activity, Urban, Rural, and Regional Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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