City Size Distribution, City Growth and Urbanisation in China

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City Size Distribution, City Growth and Urbanisation in China CITY SIZE DISTRIBUTION, CITY GROWTH AND URBANISATION IN CHINA By YAN CEN Thesis submitted to The University of Birmingham for the degree of DOCTOR OF PHILOSOPHY Department of Economics The University of Birmingham April 2015 University of Birmingham Research Archive e-theses repository This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder. ABSTRACT This thesis explores three topics within the broad area of urban growth and environment in China, city size distribution, city growth pattern and the environment impacts of city growth. The research is firstly motivated by two key stylized facts- the well-known Zipf's law for cities (which states that the number of cities of size greater than S is proportional to 1/S, i.e. the rank of a city is inversely correlated with its size) and Gibrat's law for cities (which states that city growth rate is independent of its size). Thus Chapter 3 and 4 examine the evolution of city size distribution by testing for Zipf‟s law and Gibrat‟s law in China from 1879 to 2009 (number of cities varies over time). Chapter 5 thereafter investigates the growth pattern of Chinese cities by testing for the sequential city growth (Cuberes, 2009). Given the concern of the environment impacts of city growth, Chapter 6 examine the impact of city size on local air quality using 30 major cities in China from 2003 to 2012. Our findings suggest that Zipf‟s law emerged in the end of 1980s and early 1990s, before that Chinese city size distribution is less even than Zipf‟s law predicts while after that the city size distribution is more even than Zipf‟s law predicts. Gibrat‟s law involves as an explanation of Zipf‟s law (Gabaix, 1999), results confirm that Chinese cities might follow Gibrat‟s mode of urban growth- stochastically growth under a homogeneous urban growth process with a common mean and variance. Secondly, with respect to the urban growth pattern, results show that Chinese cities tend to grow sequentially, with the largest city grew the fastest initially and then the second largest city grew the fastest, if we use the same econometric method as Cuberes (2011). Thirdly, the results of the impact of city size on local air quality are mixed (details show in Chapter6- results table) and also extend the EKC hypothesis to city total GDP level, i.e. city total GDP or economic scale has an inverted-U shape relationship with pollution. The results from this thesis both contribute to the literature on urban growth and environment and the urban policy makers in terms of designing efficient urban development policy. Key words: city size distribution, Zipf‟s law, Gibrat‟s law, sequential city growth, air quality 1 ACKNOWLEDGEMENTS My thanks go primarily to my supervisors Professor Matthew Cole and Professor Robert Elliott who are the best supervisors in the world. I would like to appreciate them for being patient always and providing invaluable guidance and encouragement throughout my time at Birmingham. I am also grateful to the Department of Economics in University of Birmingham for providing the bursary funding for my PhD. Many thanks also go to members of the department and research students for all their assistance. Finally, special thanks go to my parents and beloved sister Chen, for their love, constant support, patience, and encouragement during the writing of this thesis. 2 TABLE OF CONTENTS ABSTRACT ..................................................................................................................................... 1 ACKNOWLEDGEMENTS ............................................................................................................ 2 TABLE OF CONTENTS ................................................................................................................ 3 CHAPTER 1 .................................................................................................................................... 6 CHAPTER 2 .................................................................................................................................. 16 2.1 DATA SPECIFICATION ...................................................................................................... 17 2.2 CHINESE URBAN SYSTEM .............................................................................................. 22 2.2.1 Four Economic Regions ..................................................................................................... 27 2.2.2 Overview of Chinese Urban Development ........................................................................ 28 2.2.3 Review of three policies in China ...................................................................................... 33 ‘Economic Reform’ .............................................................................................................. 34 ‘One Child Policy’ ................................................................................................................ 34 ‘Hukou system’ ..................................................................................................................... 35 Possible linkage between policies and city size distribution................................................ 36 CHAPTER 3 .................................................................................................................................. 43 3.1 INTRODUCTION ................................................................................................................. 44 3.2 LITERATURE REVIEW ..................................................................................................... 49 3.2.1 Pre-Zipf‟s Law ................................................................................................................... 50 3.2.2 Zipf‟s Law and Theoretical Explanations .......................................................................... 51 3.2.3 Debate on Testing for Zipf‟s Law ...................................................................................... 57 3.2.3.1 Pareto Distribution or Log-normal Distribution .......................................................... 58 3.2.3.2 Definition of Cities, Testing Methodology and Doubts about Zipf‟s Law .................. 65 3.2.3.3 Deviations from Zipf‟s Law ........................................................................................ 69 3.2.4 Empirical Evidence in China ............................................................................................. 72 3.3 METHODOLOGY.................................................................................................................. 79 3.4 EMPIRICAL RESULTS ......................................................................................................... 84 3.4.1 Zipf‟s Plots ......................................................................................................................... 84 3.4.2 Repeated Cross-Sectional OLS Regression and Lagrange Multiplier (LM) for Pareto Exponent ..................................................................................................................................... 93 (1)Testing for the whole sample .............................................................................................. 93 (2)Testing for Prefecture-level cities and county-level cities ................................................ 101 (3)Testing for truncated samples ........................................................................................... 109 3 3.4.3 Panel data testing for Zipf‟s law ...................................................................................... 119 3.4.4 Urban primacy measure versus Zipf‟s exponent .............................................................. 136 3.5 CONCLUSION...................................................................................................................... 140 CHAPTER 4 ................................................................................................................................ 143 4.1 INTRODUCTION ................................................................................................................. 144 4.2 LITERATURE REVIEW ..................................................................................................... 146 4.2.1 Theoretical Review .......................................................................................................... 146 4.2.2 Empirical Review .......................................................................................................... 148 4.2.3 Empirical Evidence in China ........................................................................................ 153 4.3 METHODOLOGY .............................................................................................................. 155 4.4 RESULTS .............................................................................................................................. 158 4.4.1 Correlation between Population Growth Rate and Initial Size ........................................ 159 4.4.2 City Growth Regression ..................................................................................................
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