Analysing Mexican Population Concentration: A Model with Empirical Evidence

Abstract

In this study, we analyse the economic determinants of population concentration in Mexico, estimating a time-series/cross-sectional model for 1895-1990 in which the Pareto coefficient is a measure of population concentration. The fundamental lesson of this paper is that there is a clear and unequivocal U-shaped pattern between population concentration and economic development. This finding was not confirmed in cross-national studies. Our results are consistent with central-place theory and suggest that as development proceeds, agglomeration benefits of large cities are exhausted and the optimum level of production is exceeded. Hence, government policies aimed at encouraging decentralisation may not interfere with economic growth and efficiency. Our findings point to the significant non-linear relationship between population concentration and a number of variables in the model including total population, urbanisation ratio, total land area, population density and central government expenditure. The significance of the central government expenditure coefficient in most versions of the model indicates that this variable plays an important role in shaping the city-size distribution in Mexico.