Gibrat's Law for (All) Cities: Reply

Author: Eeckhout, Jan

Source: The American Economic Review, Volume 99, Number 4, September 2009 , pp. 1676-1683(8)

Publisher: American Economic Association

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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.

Document Type: Short communication

DOI: 10.1257/aer.99.4.1676

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