The Impact of Population Agglomeration of an Area on Its Neighbors – Evidence from the US

Abstract

Regions with high population agglomeration have always been important centers of growth throughout history. However, little is known about the economic spillovers an agglomerated region produces on its neighboring areas. In this paper, I look at the effect of growth of an agglomerated county on its surrounding non-agglomerated counties, by using the methods outlined in Qu and Lee (2015) and Qu, Wang and Lee (2016). I use the US county as the geographic unit of analysis. The results show that the impact of is inverted U-shaped – at low levels of per capita income of an agglomerated county, growth has a positive impact on the neighboring non-agglomerated counties, relative to non-agglomerated counties that do not have any agglomerated counties nearby. However, as the agglomerated county gets richer, its relationship with the neighboring non-agglomerated county becomes negative, relative to the growth rate of a non-agglomerated county that has no agglomerated county nearby.

Keywords: population agglomeration, spillovers, US counties

JEL Classification: O18, R1