Markets and Transactions Costs: Industrialization and

History, Institutions and Cities: A View from the Americas

Sukkoo Kim Washington University in St. Louis and NBER and Marc Law University of Vermont

Preliminary Draft: Do not quote or cite. December 9th, 2010

Abstract In this paper, we use the familiar strategy of exploiting the quasi-experimental distribution of political institutions in the Americas, caused by variations in European colonial experience, to examine the role of institutions on urban and local development in the Americas. Political institutions—whether unitary or federal, or parliamentary or constitutional—matter for urban and local development because they define the lines of authority among national, regional and local governments. We argue in this paper that in Latin America, the centralization of political power in federal governments at the expense of local governments contributed to the rise of urban primacy whereas in Canada and the US, political decentralization fostered more balanced patterns of urban and local development. Yet, even between US and Canada, we find that the differences in the levels of political centralization at the state or provincial levels led to important divergences in the organization and number of cities and local governments.

2

I. Introduction Within a relatively short period of time, a significant literature has emerged that links history, institutions and economic growth, especially for the European colonial economies (see, for instance, Engerman and Sokoloff, 1997, 2002; Acemoglu et al., 2001). History matters because variations in historical conditions at the time of European conquest—whether factor endowments, indigenous pre-colonial development, climate, the disease environment facing European settlers, or the conditions of European technological and political development at the time of conquest—played vital roles in influencing the transplantation of a variety of colonial institutions. And even though subsequent changes in economic and political conditions have modified in important ways these initial institutions, early institutions, by placing constraints on future institutional change, significantly shape the form of today’s institutions, which, in turn, may help explain why some countries are rich and why others are poor. The urban economics literature, on the other hand, has been much slower to examine the role of institutions in influencing urban or spatial development. With some exceptions, the literature treats the growth, location and size distribution of cities as being determined solely by the economic forces of agglomeration and congestion. This lack of interest among urban scholars in studying the role of institutions is surprising since cities are often viewed as “engines of economic growth.” It is also puzzling because cities are foremost “creatures of states,” meaning that a higher-level of government usually has the power to determine how and whether local governments can be established, their geographic boundaries, the authority that local governments may possess, and the revenue sources they may tap, unless explicitly constrained by constitutional provisions or home rule legislative enactments.

3

In this paper, we explore the complex linkages among history, institutions and urban development in the New World. In the Americas, the exogenous role played by European colonists in influencing the path of institutional development has not been questioned (North 1990). Yet, except for the early literature on Latin American urban primacy (see, for instance, Morse 1971 and McGreevey 1971), relatively few scholars have seriously explored the effect of institutions on urban or spatial development. Because political institutions fundamentally define the rights of property and the lines of political authority among national, state, and local government units, institutions are likely to play a key role in determining the type of fiscal federalism that emerges and the patterns of local economic development. The impact of institutions on economic development of North and Latin America are especially sharp. In Latin America, conditions of inequality led to poor, un-democratic institutions that hindered economic growth (Engerman and Sokoloff 1997). The concentration of political power in a handful of elites also favored the rise of powerful centralized national governments and politically and fiscally weak regional and local governments (Sokoloff and Zolt 2006). Not surprisingly, this imbalance of political power between various political jurisdictions led not only to the rise of urban primacy among national and regional capital cities (Galiani and Kim 2010), but is also believed to have contributed to poor long-run economic performance. In North America, on the other hand, initial conditions of equality led to the rise of democratic institutions that are believed to have fostered innovation and economic growth. In addition, egalitarianism and democracy were accompanied by political decentralization at the state and local levels.1 In the US, New England towns became symbols of local autonomy.2 In

1 One of Alexis de Tocqueville’s most widely quoted passages from his Democracy in America pertains to local governments: “The principle of sovereignty of the people governs the political systems of the Anglo-Americans... In the nations by which the sovereignty of the people is recognized, every individual has an equal share of power, and participates equally in the government of the state... The township, taken as a whole, and in relation to the central

4

the South, counties became important units of local government. In the Middle Atlantic, local governments consisted of counties and towns. In the new states of the West, counties became the most dominant form of local government that sometimes included townships.3 The status of cities varied by region and over time. In general, cities were initially recognized as public corporations, not unlike other corporations at the time, but with the rise of Dillon’s rule, cities became “creatures” of state governments. Yet, even before the rise of the municipal home-rule movement, American cities possessed considerable political autonomy. In Canada, unlike the US, towns and counties were never as important local government units.4 The most important unit was the municipality. Scholars generally believe that, from the colonial years until the late nineteenth century, local municipalities in Canada had considerable local autonomy (Crawford 1954). Indeed, in both the US and Canada, local governments were the most important units of government at the turn of the twentieth century as evidenced by the fact that local government expenditures exceeded the expenditures of other levels of government in both nations. Nevertheless, there is considerable evidence that the political autonomy of local governments diverged between US and Canada, especially over the second half of the twentieth century (Kim and Law 2010). Whereas US local governments became more independent of state governments, the provincial governments in Canada, especially in Ontario, began to exercise greater political authority over local governments.

government, is only an individual, like any other to whom the theory I have just described is applicable. Municipal independence in the United States is, therefore, a natural consequence of this very principle of the sovereignty of the people. All the American republics recognize it more or less; but circumstances have peculiarly favored its growth in New England.” 2 In New England, counties were also initially created for judicial purposes. In recent years, however, some states (for instance, Connecticut) have eliminated their county governments. 3 In Illinois, the southern region was founded by settlers from the southern states who adopted a county form of government. The northern portions of Illinois, however, were founded by northerners who promoted a township form of government. Over time, as northern counties became more politically influential, the township form of government spread to most counties in Illinois. 4 See Manke (2005).

5

While establishing a link between institutions and urban development is challenging, we believe that variation in urban development between Latin America and North America, between the US and Canada, and even among US states and Canadian provinces sheds considerable information. In this paper, we explore variations in urban primacy and the size distribution of cities among the countries in Latin America, between the United States and Canada, and among regions of Canada and the US to show the role of political centralization in determining the pattern of urban development. Additionally, we explore the role of political institutions between US and Canada and among Canadian and US regions by examining differences between Canada and the US, as well as among US states, in the number and scope of local government units. While the institutional rules guiding the power of national, regional and local governments change and evolve over time, we find that these changes are conditioned upon institutional rules adopted during the colonial period. In Latin America, recent moves toward greater political decentralization are unlikely to affect the pattern of urban development. While there is evidence of a greater degree of political decentralization in several Latin American countries, the legacy of highly centralized government in terms of the distribution of city sizes and the extent of urban primacy persist to this day. In Canada, centralization of political power within provincial governments was made possible by the adoption of the parliamentary form of government at the provincial level. The absence of provincial constitutions combined with powerful provincial parliaments provided little political authority for Canadian local governments. In the US, despite the changing roles of state and federal governments and their relations to local governments, state governments are constrained by constitutions and local representation within state legislatures. Local governments have therefore always been able to

6

exercise considerable political autonomy. Indeed, the proliferation of local governments, all with taxing powers, is a uniquely American development. The paper is organized as follows. In section II, we outline the history of political institutions in the Americas as it relates to the rights and authority of local governments. In section III, we examine urban primacy and the size distribution of cities for countries in the Americas as well as regions in the US and Canada over time. In section IV, we analyze variations in the number, size and scope of local governments in US and Canada over time and use differences in the degree of political centralization between the two countries to examine the relationship between political centralization and the number of local government units across Canadian provinces and US states, as well as between Canadian and US metropolitan areas. In section V we exploit variation across US states and metropolitan areas to explore how differences in the extent of political decentralization (measured by municipal home rule status) across US states influenced the number of local government units and the fragmentation of metropolitan areas. Finally, section VI concludes.

II. The Institutional Rules of Local Governments in the Americas In this section, we examine the institutional rules that determine the political and fiscal autonomy of local governments in the Americas from a historical perspective. Institutions, whether formally defined by constitutions, informally by norms and precedents, or by the sheer force of military rule, define the lines of authority among national, state and local governments. In the Americas, due to differences in colonial histories, the distribution of powers granted to the different levels of government varied significantly. In Latin America, political power has been historically centralized within national governments, usually at the expense of regional

7

(provincial or state) and local governments. To this day, notwithstanding recent movements toward greater local decentralization in Latin America, taxing authority continues to remain highly centralized at the national level (Diaz-Cayeros 2006). In the US, colonial conditions led to the creation of a federalist form of government that granted significant political autonomy to states and their local governments. In Canada, despite the attempts by the founders of Canadian confederation to form a more centralized federal union, federalism came to favor decentralized provincial rights, but these rights were not extended to local governments. A. Local Governments in Latin America In Spanish America, just as in the Iberian Peninsula, political power was highly centralized in the King, his council and the Viceroy. Unlike in North America, no charters were granted to establish colonists’ rights of self-government. Local assemblies possessed few political rights. Because the main objective of the Spanish crown was to mine silver using native labor, there was little incentive for the Spanish to establish institutions that provided colonists and natives with powers of local autonomy (Sokoloff and Engerman 1997). Thus, local governments in Latin America were under the direct control of the King and his advisors. Even after independence, civil wars and the establishment of constitutional governments in many countries, most Latin American nations remain highly centralized at the national level. Formally, countries such as Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Panama and Paraguay are highly centralized, as they possess a unitary form of government; Bolivia, Chile, Honduras, Nicaragua, Peru and Uruguay are moderately centralized whereas Argentina, Brazil, Colombia, Mexico and Venezuela are decentralized, possessing federalist forms of government (see Table 1).

8

Nevertheless, throughout Latin America, central governments wielded considerable authority over local governments until very recently, even in countries with a federalist form of government. Table 2, based on Myers (2002), presents information showing how national governments centralized political power over capital cities and other municipalities in Latin America during the period between 1944-1962 and 1978-1982. In the mid-twentieth century, the most centralized countries were Mexico, Colombia and Peru. In these countries, the national government appointed mayors for the capital city and other cities; in the next group of countries, Brazil and Argentina, the central government appointed capital city mayors but used a mixture of elections and appointment for mayors of other cities; in Venezuela, the national government appointed its capital city mayor but elected other city mayors; and, in the least centralized countries (Cuba, Guatemala, and Chile) mayors of all cities (capital or otherwise) were elected. By the second half of the twentieth century, however, most Latin American countries moved toward political decentralization, allowing the election of mayors for capital and other cities. The major exceptions were Havana and Buenos Aires whose mayors continued to be appointed. The national governments of Cuba and Venezuela also appointed the mayors of other cities. These patterns of central government control over municipal affairs contrast sharply with the experience in Canada and the US, where the mayors of all cities, including national and subnational capital cities, have always been elected. Yet, despite these recent moves toward greater formal political decentralization in Latin America, there remains considerable evidence that Latin American countries are still highly centralized. Despite the fact that Mexico has a federal form of government, Nickson (1995) argues that Mexico is still an extremely centralized state, even by the standards of Latin America. In Mexico and other Latin American nations, political power was originally centralized

9

in the national capital, which in turn received the lion’s share of the national government’s revenues. Similar histories can be told for Argentina, Colombia, Chile and elsewhere in Latin America (Nickson 1995). Political centralization in capital cities was aided by a policy of general neglect of other municipalities. Sokoloff and Zolt (2007) and Willis et al (1999) note that local governments in Latin America possessed little political autonomy and few fiscal resources. While local governments in the US and Canada relied heavily on property taxes to fund local public goods such as roads, infrastructure, and education, municipalities in Latin America were prevented from raising revenues by their national and state governments. Many countries in Latin America also relied heavily on regressive taxes on consumption such as excise taxes and taxes on foreign trade— taxes that are usually collected by central governments--rather than on personal or corporate income taxes. In 1930, taxes on international trade accounted for 44% of central government in Brazil, 48% in Argentina, 54% in Chile, 55% in Colombia, 41% in Mexico, and 51% in Venezuela (Sokoloff and Zolt 2007). Diaz-Cayeros (2006) notes that tax collection in Latin America remains highly centralized in the national government and that state and local governments rely primarily on transfers from the central government. B. Development of Local Governments in the US When British settlers arrived in North America, they attempted to establish local institutions that were similar to those of their mother country. Contemporaneously in England, local governments consisted of first-tier counties that had political jurisdiction over smaller second-tier townships or manors. The King and Parliament had, by the late seventeenth century centralized authority over most these local governments through the appointment of county sheriffs and justices but their control was not highly systematic as local officers were chosen

10

from the local rural gentry. The larger cities, on the other hand, possessed royal corporate charters that granted them some measure of autonomy such as commercial privileges and the right to elect local officials. Due to initial differences in the degree of inequality income and social status, the American colonies varied in their adaptation of English local institutions.5 In Virginia and other southern colonies where inequality was high, the elites closely adopted English local government institutions and established counties as the local unit of government. Similar to England, the governor of the colony appointed county officers in these southern colonies. In more egalitarian New England, however, local institution diverged from that of the mother country from the outset. Favoring compact settlements, the town became the primary unit of local government in New England, although counties were also organized for judicial purposes. Most importantly, however, the town officers in New England were elected. In the Middle Colonies, the local institutions combined New England towns and southern counties but with democratic features as both town and county officials were elected. From the War of Independence to the Civil War period, the US county-town model of local government evolved toward its modern form and gradually became more uniform across the country. While local institutions continued to vary across the states, the hybrid system developed in the Middle Colonies eventually spread to large parts of the US and, with the rise of Jacksonian democracy, local officials even in the South were chosen by elections. As cities increased in number, the status of municipalities in relation to their respective states also came into question. While few cities possessed government charters as in England, Frug (1999) argues that most courts treated cities initially as public corporations. However, as cities and other forms

5 See Kim (2009) for a detailed discussion of the divergence in legal and political institutions between Massachusetts and Virginia.

11

of local government became integrated into state and national economies, the state legislatures and courts began to define more clearly the lines of political authority between states and their localities. Under US federalism, the federal-state relationship is federal but the state-local relationship is unitary (Elazar, 1972). Since the federal Constitution is silent on matters of local governments, local governments became “creatures” of states because states possessed residual rights not specified in the Constitution. Thus, according to Justice Taney, the “[c]ounties are nothing more than certain portions of the territory into which the state is divided for the more convenient exercise of powers of government” of the state. With the adoption of Dillon’s rule, the cities also became “creatures” of states, but legislatures and courts made a distinction between municipalities and counties as municipalities, unlike counties, were created mainly for the interest of the locality and its people.6 While municipalities generally possess governmental, corporate, and proprietary powers, counties usually lack corporate and proprietary powers.7 Yet, despite the fact that US local governments became “creatures” of state governments, for a variety of reasons local governments continued to possess considerable political and fiscal autonomy. First, many Americans, especially those in New England, informally viewed states as

6 The 1866 court decision by Iowa Supreme Court State case of City of Clinton v. Cedar Rapids decided by Judge John F. Dillon, as well as subsequent US Supreme Court rulings in 1903 and 1923, firmly established the principle of Dillon’s rule, which states that “Municipal Corporations owe their origin to, and derive their powers and rights wholly from the legislature. As it [the state legislature] creates, so it may destroy. If it may destroy, it may abridge and control.” The path to Dillon’s rule was paved by a series of court decisions. First, in the 1819 US Supreme Court case of Trustees of Dartmouth College v. Woodward, the court made a distinction between private and public corporations. Since cities and other local governments were public rather than private, it was argued that these government units were founded for public purposes. A municipal charter was not a contract between a city and a state but an ordinary act of legislation (McBain 1916)). James Ken’s influential Commentaries on American Law of 1836 further argued that public corporations such as counties, cities, towns and villages were invested with subordinate powers for purposes of local public services and were subject to the control of the state legislature (Krane, Rigos and Hill 2001). 7 Governmental powers refer to ordinance making authority, use of police powers and taxation; corporate powers include the ability to enter into contracts, to buy and sell property and can sue or be sued; proprietary powers permit local governments to engage in commercial activities such as owning and operating a utility (Krane, Rigos and Hill 2001).

12

a federation of localities. This gave popular credence to the notion that local governments should have their own sphere of authority. Second, many states began to recognize counties as municipal corporations through constitutional or statutory provisions. Third, over time, state constitutional reforms placed strict limitations on state legislatures, prohibiting them from creating or destroying counties or cities or changing their boundaries, and outlawing special legislation for cities. Fourth, many state legislatures granted home rule to cities and, in some cases, to counties.8 Finally, the geographic diffusion of political power within states made it costly for members of state legislatures to coordinate in the exercise of their authority. While strong party discipline could at times induce state legislatures to intrude on local matters, most state legislation was routine and was initiated by localities (Burns and Gamm 1997). C. The Development of Local Governments in Canada From the beginning of European settlement until the late eighteenth century, local government scarcely existed in French and British Canada. While there were a handful of cities with charters (e.g. Quebec City and Halifax), settlement was scattered and most settlers had no influence over local affairs. Authority over local matters was vested in colonial governors and their appointed councils. After the 1780’s, however, the influx of American migrants from New York and New England increased the demand for local government autonomy. However, neither the governors of British Canada nor the Canadian elites who held appointed offices had an incentive to extend autonomy to local governments. Counties were created but with no municipal

8 In the 1840s and 1850s, local delegates to state legislatures enacted numerous pieces of “local privilege” or “special privilege” legislation to manipulate municipal activity in competition with local city councils. In addition, states also passed the so-called “ripper laws” which transferred control of certain services from the municipal government to state-appointed officials such as the New York Metropolitan Police District. To counter state interference, cities demanded home rule. Home rule legislation varies significantly by state but are of two general types: the first type enumerates in detail the matters of local concern for home rule whereas the second type is broader and reverses Dillon’s rule by giving local governments the residual powers not prohibited by state constitutions. See McBain (1916), McGoldrick (1933), Hill (1978), and Krane, Rigos and Hill (2001) for an in depth state-by-state analysis of the home-rule movement.

13

functions. The 1793 Parish and Town Officers Act established the election of local officers, but assessment and rates of taxation were set by acts of the colonial legislatures rather than by local officers. In cities, however, the increased demand for local public goods eventually led to incorporation and greater local autonomy (Crawford 1954). In Upper Canada, the first formal system of local government was established in 1841 with the District Councils Act. Under this act, the inhabitants of each district constituted a body corporate and its powers were exercised by a warden appointed by the Governor and a council elected by inhabitants. The Governor also appointed the district clerk, treasurer and surveyors, although they were accountable to the council. In 1849, the Municipal Act, also known as the Baldwin Act, established the local municipal system as it largely exists in Ontario today. Unlike in the US, the county, which replaced the district, became the upper-tier of municipal government but with no true municipal functions. Instead, rural townships, villages, towns and cities all became independent units of municipal government. In Canadian federalism, residual rights not specified in the federal constitution belong to the federal rather than provincial governments. Nevertheless, under the terms of the 1867 British North America Act (Canada’s original constitutional document) local governments, became “creatures” of provincial governments. Similar to the US, the provincial-local government relationship is unitary. But, unlike in the US, local governments in Canada occupy a very weak legal/constitutional position. First, provincial governments, unlike US states, are not bound by written constitutions.9 There are no constitutionally entrenched documents that limit the power of provincial governments over their respective localities. Accordingly, in Canada, there is no home-rule for local governments. Second, in contrast with the US, the parliamentary form of 9 Since the 1980s the province of British Columbia has had a written constitution; however, the Constitution of British Columbia Act is simply an ordinary statute of the provincial legislature that can be amended by a simple majority of the legislature.

14

government and the accompanying notion of “parliamentary sovereignty” have historically facilitated the centralization of provincial power over local governments. Third, the development of significant provincial government revenues from a variety of sources allowed centralization of provincial authority over its local governments (see Kim and Law 2010 for a more detailed discussion of these trends). Finally, unlike in the US, the Canadian federal government does not deal directly with local governments. Whereas in US federal government funds are often distributed directly to local governments for disbursement, the federal government deals directly only with provincial governments, which in turn disburse funds to local governments (usually for very specific purposes). Thus, in Canada, intergovernmental transfers, which are very significant, re-enforce the fiscal authority of provinces over their local governments (Goldberg and Mercer 1986).

III. Institutions and Urban Primacy in the Americas In this section, we examine the broad correlations between institutions and urban primacy in the Americas. Because political centralization at the national or sub-national (provincial or state) level is more likely to lead to an unbalanced urban or local development as compared to political decentralization at the local-level, we examine urban primacy over time (Galiani and Kim 2010). While there is no single widely accepted definition of urban primacy, there are two general types of measures. The first, motivated by Jefferson (1939), examines the population of the largest city or the n-largest cities as a percentage of either the urban population or the total population. The second, motivated by the rank-size literature, estimates the size distribution of cities using the Pareto distribution.10

10 More generally, the size distribution of cities is defined as a Pareto distribution: R = AS-α where R is the rank or the number of cities with population S or more, A is a constant, S is the population of city and α is the Pareto

15

Scholars generally believe that urban primacy is a salient character of urban development in Latin America but not in North America. While opinions vary, many believe that urban primacy arose in Latin America in the early nineteenth century or even earlier. Morse (1971), using the share of the population of the largest city as a measure of primacy, finds that urban primacy emerged in Argentina and Cuba around 1800, in Colombia, Mexico, and Peru in 1850, and in Brazil and Venezuela by 1900 (see Table 3). In all of these cases, the primate city was also the national capital. McGreevey (1971), however, using a measure based on the Pareto distribution of city sizes, dates the rise of primacy in Mexico to as early as 1750, Cuba to 1825, Chile to 1830, Argentina to 1850, Brazil to 1880, Peru to 1925, and Venezuela and Colombia to 1950. Portes (1976) argues that, by 1970, most Latin American countries, except for perhaps Brazil and Colombia, exhibited significant urban primacy characteristics. In Tables 4 and 5, we present estimates of urban primacy based on the share of the urban population accounted for by the largest city and the Pareto coefficient, respectively. The data are based on municipalities with population greater than 25,000.11 In Table 4, we find that the largest city in the US, New York City, accounted for 17.4% of the urban population greater than 25,000 in 1900 but that figure gradually declined to 6.8% by 2000. By this measure, Toronto, Canada, comprising 18% of the Canadian urban population, was much more primate in 2000. In Latin America, the largest cities in Bolivia, Chile, Colombia, Ecuador, Honduras, Nicaragua, Panama, Peru and Uruguay contained a much higher share of their urban population than their

exponent. The rank-size rule is met if the Pareto coefficient is equal to one. If the Pareto coefficient is less than one, then the city size distribution is skewed toward larger cities and exhibits more urban primacy than if the coefficient is greater than one. 11 We have also estimated primacy measures using cities whose populations were greater than 2,500. While the absolute values differ significantly from those reported in Tables 1 and 2, the relative cross-national and time series patterns are very similar.

16

counterparts in Anglophone North America. Importantly, in contrast with the US and Canada, the largest cities in each Latin American country, except for Brazil, were national capitals. We find that the Pareto coefficient for the U.S. rises from 1.06 to 1.27 between 1900 and 2000 (see Table 5), suggesting a shift in the skewness of the size distribution of cities toward smaller-sized cities. While the Pareto coefficient for Canada and the Latin American countries were close to one, suggesting a more balanced distribution of city sizes, the coefficients are relatively much smaller than those of the US. The Latin American countries, however, exhibited much greater primacy when we defined cities using a lower population threshold of 2,500. As expected, the Pareto coefficients for Argentina, Bolivia, Chile, Ecuador, Mexico, Panama, Peru, Uruguay and Venezuela were less than 0.9 suggesting a significantly skewed distribution toward the largest cities in those countries. The data shown in Tables 4 and 5 generally support the view that urban development in Latin America has been characterized by more primacy than urban development in North America. At any point in time, these measures indicate that the distribution of cities sizes in the US is less primate than the distribution in Canada, which in turn is less primate than the distribution for Latin America; over the twentieth century, the data also indicate that the city-size distributions in the US and Canada have become less primate whereas the pattern is reversed for those in Latin America. Thus, the difference in the level of primacy between Latin America and English-speaking North America seems to have widened over time. Because we have consistent population data on city sizes and for Canada and the US, we also computed various measures of urban primacy for US and Canadian cities during the twentieth century. A comparison of the patterns of primacy between these two countries is informative because the two countries share much in common (language, British colonial

17

institutions and legal institutions, a common border, etc.) but, as noted earlier, the degree of political centralization of state or provincial government authority over local governments varied between the two countries. Accordingly, if institutions matter, we may observe different trends in the degree of primacy in Canada and the US. Additionally, the richness of our Canadian and US data sets allow us to investigate whether the extent of primacy varies by region and whether there has been convergence or divergence in primacy within Canadian and US regions. Figure 1 plots the percentage of the total population residing in the largest city and largest metropolitan area in Canada and the US for each decade during the twentieth century. Regardless of which measure of primacy we use, Canada is more primate than the United States. Additionally, while the US measures of primacy have either remained fairly constant or declined over time, there is evidence of an increase in the extent of primacy in Canada, particularly in recent decades. Tables 7 and 8 show estimates of the Pareto exponent for US and Canadian cities with different population cutoffs, and for different portions of the city-size distribution. We report estimates using both log(rank – ½) and log(rank) as the dependent variable.12 While the overall distribution of city sizes in both countries appears to be become less primate over time, regardless of how we slice the data, the degree of primacy is less in the US, and the trend toward less primacy more pronounced for the US than for Canada. Tables 8 and 9 show the trends in primacy, as measured by the Pareto exponent, for US and Canadian regions. Again, we report estimates using log(rank – ½) and log(rank) as the dependent variable. Several interesting patterns emerge from an analysis of these tables. First, for each US region (with the exception of East South Central), the Pareto coefficient becomes larger over time, indicating greater equality in city sizes over time (i.e. less primacy). Accordingly, the trend away from primacy appears fairly uniform across US regions, which is consistent with the 12 Log(rank – ½) has been shown to have superior small sample properties. See Gabaix and Ibragimov (2007).

18

perspective that political decentralization at the local level has contributed to greater equality in city sizes across most US regions. Second, at any point in time, New England has a larger Pareto coefficient (i.e. is less primate) than other regions. This is perhaps a long-lasting consequence of the early diffusion of local political authority in New England within towns and villages. Very different patterns are apparent from an analysis of the data from Canadian regions. Interestingly, while the estimates of the Pareto distribution for Canada as a whole indicated declining primacy over time, the estimates for most Canadian regions suggest an increase in primacy (i.e. a smaller estimate of the Pareto coefficient) over time. While the city-size distribution became more equal for Quebec, it became less equal for other regions. The experience for most Canadian regions is thus consistent with the idea that political centralization within Canadian provinces has contributed to greater urban primacy in Canada. In recent years, a number of cross-country studies of urban primacy have appeared in the urban economics literature.13 These papers generally find that urban primacy is not mono-causal but that economic, demographic and geographic factors all seem to contribute to explaining primacy. For example, GDP per capita and total population seem to increase primacy whereas total land area, share of trade in GDP, and transportation density decrease primacy. The most important factor, however, seems to be political as the concentration of government expenditures, unitary political systems, political corruption, and dictatorships all seem to raise primacy significantly. In addition, when capital city dummies are included, the correlation with primacy was always strongly positive. It is well known that urban primacy in Latin America is caused by disproportionately large national and provincial capital cities relative to their non-capital counterparts (Myers 2002;

13 See Rosen and Resnick (1980), Wheaton and Shishido (1981), Ades and Glaeser (1995), Henderson (2002), Moomaw and Alwosabi (2004) and Soo (2005) among others.

19

Portes 1976). By contrast, the national capitals in the U.S. and Canada are not their largest cities and, in the US, state capitals are the largest city in their respective states in only half of all states. While economic forces alone may explain urban primacy, many suspect that the excessively large capital cities in Latin America are caused by political forces such as the centralization of political power, corruption, and rent-seeking. On the other hand, the fact that US state capital cities are relatively small probably reflects political decentralization within states. In two related papers, Galiani and Kim (2010) and Kim and Law (2010) have investigated the effect of national and sub-national capital city status on city size, using data from Latin America and North America. Controlling for various geographic and economic factors that are likely to affect city population, Galiani and Kim (2010) find that for Latin American countries in 1900, national capital status increased population by 523% relative to non-national capital cities and that this effect increased to 919% by 1990. The corresponding estimates for sub-national (state or provincial) capitals were 70% in 1900 and 232% in 1990. These estimates suggest substantial political centralization within Latin American countries. Kim and Law (2010) estimate similar regressions for Canada and the US. While the impact of capital city status on population for the two North American countries is smaller than for their Latin American counterparts, there is nevertheless considerable evidence that political centralization influences city size. Specifically, Kim and Law (2010) find that Washington, DC’s status as the national capital increased its population by 68% relative to other cities in 1900 and 447% in 2000. In Canada, Ottawa’s capital city status increased its population by 159% in 1920 and the effect increased to 589% by 2000. These trends reflect political centralization at the national level in both countries. Within US states and Canadian provinces, Law and Kim (2010) find a divergence in the effect of sub-national capital city status on city population. While Canadian

20

provincial capital city status increased city population by 48% in 1900 and over 100% in 2000, the US state capital city effect increased only modestly, from 30% to 49%. Law and Kim (2010) interpret these different patterns as evidence of diverging trends in Canadian and US federalism, specifically, the centralization of political power within Canadian provinces, and a continued emphasis on localism within US states.

IV. The Number, Size and Scope of Local Governments: the US versus Canada Institutions not only affect urban primacy or the size distribution of cities across nations. They also influence the number, size and scope of local governments. Due to data limitations, we focus exclusively on the differences in the number and composition of local governments between US and Canada as well as between US states and Canadian provinces. In the US, the institutional rules that provide local governments with significant autonomy have also led to the proliferation of the number and types of local governments to a bewildering degree. In Canada, by contrast, the centralization of political authority by provincial over their local governments has led to the physical and functional consolidation of cities within metropolitan areas. Thus, the number, size and functions of cities in Canada sharply differ from the US. Local governments vary by size, function and political hierarchy. There is no widely accepted definition of local government, but, for Anderson (1949) the key characteristics of a “unit of government” is that it has authority over persons within its territory, has a legislative body composed of elected or appointed officials, has a separate legal identity, a degree of autonomy, is empowered by law to perform governmental service, and has the power to raise revenue by taxation, by special assessment, or by other means. By this definition, the generally recognized units of local government in the US are counties, cities, villages, boroughs,

21

incorporated towns, towns, townships, school district and other special districts for schools, parks, sanitation, drainage, and so forth. In Canada, they are the urban incorporated city, town and village, rural district, county or municipality, as well as various agencies, boards and commissions (ABCs) for education, parks, utility, and transportation, among other functions. In general, election districts, judicial administration areas, civil administration districts are not considered to be a unit of local government. In the US, counties are considered as a major unit of local government because they are the principal or the largest territorial division of state for purposes of local government. Counties were originally designed to serve functions of general- and state-wide interest that the state legislature desired to have performed uniformly throughout the state area. The second category of local units is incorporated places. These are generally urban municipalities but could also include towns, villages or boroughs. As a rule, these units are part of the county or counties in which they are situated. The third class is rural government units, which include towns or townships. Like the second class these units belong to a county. The fourth and final class consists of special districts that are organized for a single special purpose such as schools, drainage, or sanitation. There are three striking differences in the structure of local governments between US and Canada. First, Canada does not possess a US-style county government system. In Canada, counties are rural units of local government in Nova Scotia and New Brunswick, not much different from other types of rural districts. In Ontario and Quebec, county boundaries are similar to the US in that they encompass other local governments, but unlike those in the US, Canadian counties are not technically governmental units as they do not have direct tax levying and tax collection functions. Rather, county councils allocate amounts to municipalities based on

22

equalized assessments. In other provinces, counties simply do not exist. Second, Canada does not have US-style special purpose districts. While ABC’s in Canada perform specialized functions, they seem to be substantially different from US special purpose districts. Whereas US special purpose districts are locally created and controlled, the creation and control of ABC’s in Canada seems to be in the hands of municipal representatives or the provincial government.14 Given the influence of provincial governments over their operation, it is therefore not obvious whether ABC’s in Canada should be counted as units of “local” government. Third, Canada’s federal government, unlike its US counterpart, is restricted in its interaction with local governments. In the US, starting with Richard Nixon’s general revenue sharing and community programs in 1968, the federal government began to distribute funds to local governments directly with few strings attached. In Canada, on the other hand, federal intergovernmental transfers are primarily sent to provincial governments. Provinces, in turn, distribute funds to local government units, generally for very specific purposes. The nature of Canadian fiscal federalism has therefore increased provincial governments’ authority over local governments whereas, in the US, fiscal federalism has strengthened the authority and autonomy of local governments with respect to state governments (Goldberg and Mercer 1986). The divergent trends in centralization/decentralization between Canadian provinces and US states is likely to have different implications, not only with respect to urban primacy, but also concerning the autonomy, scope, and number of local government units in Canada and the US. In the US, the continued emphasis on localism within states should result in more autonomous local government units, and also more local governments (normalized by population or land area).

14 Scholars generally believe that the idea of ABC’s was imported from the US. In particular, they point to New York state’s creation of Metropolitan Police District whose board was controlled by state. Interestingly, these practices in the US were met with significant local opposition and led to the movement toward home rule; in Canada, however, these practices seem to have continued in the form of ABC’s.

23

One might expect local governments within the US not only to retain significant autonomy, but also to have broader scope of jurisdiction. In Canada, on the other hand, political centralization within Canadian provinces should give rise to less autonomous local government units and also fewer local governments. Greater political centralization may manifest itself in fewer local government units because centralization raises the cost of establishing new units of local government, because uniform standards of regulation or public services are easier to establish when there are fewer local governments, or because economies of scale in administration and public service delivery are more easily achieved when there are fewer local governments. 15 Comparing metropolitan areas in Canada and the US, we might also expect greater metropolitan fragmentation (i.e. more local government units per metropolitan area) in the US than in Canada. While it is difficult to compare quantitatively the differing scope, functions and autonomy possessed by the various types of local government units in Canada and the US, it is possible, at least to some degree, to compare the number of local government units in each country over time. Unfortunately, data limitations prevent us from comparing at the broadest level the number of local government units in the two countries. While for the US, the decennial Census of Government provides a very comprehensive portrait of all types of government within the US (at the local level, the Census of Government provides information on counties, subcounty general purpose local government units, school districts, as well as special districts), we only have data on the number of general-purpose local government units for Canada.16

15 Along these lines, it is noteworthy that the massive municipal/metropolitan consolidations that have occurred within Ontario, Quebec, and Nova Scotia in recent decades was motivated largely by a desire on the part of provincial governments to attain greater economies of scale in public service delivery, and, in so doing, reduce provincial transfers to municipalities. The fact that these consolidations were pursued and implemented in spite of tremendous local opposition is evidence of the extent to which political power is centralized within Canadian provincial governments. 16 For Canada, the number of general-purpose local government units corresponds with the number of Statistics Canada census subdivisions. Canadian urban scholars believe that this is the best estimate of the number of municipal governments in Canada. Unfortunately, there is no Canadian equivalent to the US Census of Government.

24

Accordingly, for most of subsequent comparative analysis, we will restrict our attention to subcounty general-purpose local government units (i.e. municipalities) within the two countries, although we will also present some data on US special districts. Tables 10 through 12 show, for each Canadian province and US state the number of local government units by decade from 1950 to 2000. As noted, Canadian figures include only general-purpose local government units (i.e. municipalities). For the US we report the number of sub-county general-purpose local governments (cities, towns, townships, villages, boroughs) as well as the number of special districts (not including school districts). We ignore counties because counties in the US and Canada are not comparable in terms of form or function. The raw data show growth in the number of local government units in both countries over time, although the growth would seem to be more dramatic for the US than for Canada, and within the US, much of that growth is due to increases in the number of special districts. In some Canadian provinces (Ontario, Quebec and Nova Scotia) the total number of local government units has even declined in the last two or three decades, largely as a result of municipal amalgamations imposed by provincial governments. In contrast, few US states have experienced declines in the number of local government units. The tables also present information on the “density” of local government units within each state and province. We compute “density” in two ways. The first is by normalizing the number of government units by population (per 1,000 persons) within each state or province. The second is by normalizing by the land area (per 1,000 square miles) of each state or province. We remain agnostic as to which normalization is more appropriate. On the one hand, we might expect the number of local government units to increase with population since economies of scale in local government public service delivery may depend on population size. On the other

25

hand, we might also expect the number of local government units to increase with land area since economies of scale may also be a function of geographic size. Restricting attention to general-purpose local governments in Canada and the US, the tables reveal several interesting facts about trends in the density of local government units. First, while there is substantial cross-sectional variance in the density of local governments within Canadian provinces and US states (regardless of whether density is measured in terms of population or land area), the variance would seem to be higher for the US than Canada. Second, in both countries, density measured in terms of population has fallen while density in terms of land area has increased. Third, while the number of local government units per 1,000 persons is roughly comparable for Canada and the US as a whole, the number of local governments per 1,000 square miles is significantly higher for the US than for Canada. Tables 13 and 14 present data on the number of local government units within the largest metropolitan areas in Canada and the US. For Canada we show data on the number of municipalities for each of the largest twenty metropolitan areas from 1960 to 2000. For the US we present data on sub-county general-purpose local government units as well as for the special districts (exclusive of school districts) for the top 50 metropolitan areas in 1997. While the US and Canadian figures exhibit substantial variance, the US numbers are generally larger, indicating greater political fragmentation within metropolitan areas and greater decentralization. While these patterns are roughly consistent with our hypotheses regarding the effects of political centralization/decentralization on the number of local government units, there are obviously many other geographic and economic factors that may influence the number of local government units within a political jurisdiction. To obtain sharper estimates of the effect of political centralization on the number of local governments within US states (N = 50) and

26

Canadian provinces (N = 9 for 1960 and N = 10 for 1970 onward), we pooled the Canadian and US data to estimate the following regression: (1) log(LGUi) =  + log(POPi) + log(Areai) + (Canada) + Xi + i where LGUi denotes the number of sub-county general purpose local government units in state or province i; POPi is the population of state or province i; Areai is land area (in square miles) of state or province i; Canada is an indicator variable equal to 1 for Canadian provinces and 0 for US states; Xi is a vector or state or province specific control variables; and i is an error term. As control variables we include the latitude and longitude of a province or state’s geographic centre; an indicator equal to 1 if the province or state has access to a major port and 0 otherwise; an indicator equal to 1 if the province or state has civil law legal origins17; and the number of years since a state or province joined the US or Canada to approximate the number of years of settlement within a state or province. We expect the number of local government units within a state or province to be increasing in the population and land area, decreasing with civil law legal origins (it is usually argued that civil law legal origins give rise to more centralizing political institutions), and increasing with years of settlement. Finally, if political centralization within Canadian provinces reduces the number of local government units, the coefficient on the Canada indicator should be negative. We estimate equation (1) separately for each decade from 1960 to 2000. Coefficient estimates are displayed in Table 15. Each column represents a separate regression. We estimate the regression equation with and without the civil law and years of settlement control variables. We find that the Canada indicator is negative and statistically significant in all regressions from 1970 onward. Additionally, in absolute value, the size of the

17 The civil law indicator equals 1 for AL, AZ, AR, CA, FL, IN, IL, LA, MI, MS, MO, MN, TX and QC (Quebec). The list of civil law states is taken from Berkowitz and Clay (2006).

27

Canada indicator has also increased over time. These findings suggest that diverging patterns of centralization within Canadian provinces and US states have contributed to differences in the number of local government units. Other things held constant, greater political centralization within Canadian provinces (relative to US states) has resulted in relatively fewer local government units in Canada, an effect that has been increasing over time. The coefficients of the other variables generally significant and have the expected signs. Having access to a major port has a negative and statistically significant effect on the number of local governments. States and provinces with a major port have fewer local governments, perhaps because ports are natural sources of agglomeration and concentrate economic and political power. In terms of magnitude, the effect of having a port on reducing the number of local governments is smaller, however, than the effect of being in Canada. States and provinces with more people and greater land area also have more local governments. The coefficient on latitude is positive and significant, implying that the number of local government units increases as one moves northward, while the coefficient on longitude is negative and significant, indicating fewer local government units as one moves west. The latter effect reflects denser settlement in eastern states and provinces. Finally, the civil law indicator and years of settlement are not statistically significant. Pooling data on metropolitan areas for Canada in 2000 (N = 138) and the US in 1997 (N = 314), we can also estimate the effect of divergences in the degree of political centralization within US states and Canadian provinces on metropolitan fragmentation (i.e. the number of subcounty general local government units in each metropolitan area) within Canada and the US. To do this we estimate a regression similar to equation (1). In these regressions, the dependent variable is either (i) the number of sub-county general-purpose local governments within each

28

metropolitan area, or (ii) the number of sub-county general-purpose local governments per 100,000 persons. Population is the number of people residing within a metropolitan area (we omit this variable as a control if we use governments per 100,000 as the dependent variable); land area is the number of square miles of the metropolitan area, and the Canada dummy is an indicator equal to 1 for Canadian metropolitan areas. As before, we predict that the Canada indicator should be negative. Greater political centralization within Canada should result in fewer local government units within Canadian metropolitan areas (i.e. less metropolitan fragmentation), controlling for other factors. As additional controls, we include the geographic coordinates (latitude and longitude) of each metropolitan area, a port indicator equal to 1 if the metropolitan area includes a major port, and a civil law indicator equal to 1 if the metropolitan area is located in a jurisdiction with civil law legal origins. We also include an indicator equal to 1 if the metropolitan area is located on a major river, and climate controls (average daytime temperature and annual average precipitation). Finally we include an indicator variable that is equal to 1 if the metropolitan area includes a national capital (i.e. Washington, DC and Ottawa) and another indicator equal to 1 if it includes a sub-national (state or provincial) capital city. Panel A of Table 16 shows the coefficient estimates when the dependent variable is the log of local government units. Panel B shows the results when the dependent variable is the number of local government units per 100,000 persons. Regardless of which dependent variable we use, the coefficient on the Canada indicator is negative and statistically significant. Other things equal, Canadian metropolitan areas have far fewer local government units than their US counterparts. Divergences in the degree of political centralization may have therefore also contributed to a divergence in the extent of metropolitan fragmentation across the two countries.

29

The effect is also economically significant and robust to the inclusion of additional control variables. When the dependent variable is the number of local governments per 100,000 and all controls are included in the regression (see Panel B, column 3), the estimates indicate that Canadian metropolitan areas have eight fewer local government units per 100,000 than US metropolitan areas, which represents over two-thirds of the average number of local government units per capita (the sample mean is between 11 and 12 local governments per 100,000 within Canadian and US metropolitan areas). Metropolitan areas with more population and larger land area have more local government units. As before we find that the number of local government units increases with latitude, and decreases as one moves west. When the dependent variable is the log number of local government units, we find that metropolitan areas that include a major port have fewer local governments, which is consistent with our earlier findings using data on states and provinces. When the dependent variable is the number of local governments per capita, the coefficient on the major river indicator is negative and highly significant. Metropolitan areas located on major rivers have fewer local government units per capita, perhaps because rivers provide natural political boundaries. Temperature and precipitation do not have robust effects on the number of local government units. Finally, the coefficient estimates suggest that capital city status reduces the number of local government units, most significantly when the dependent variable is the number of local governments per capita. These results are consistent with the idea that concentrations of political power result in less metropolitan fragmentation and fewer local government units within a metropolitan area.

V. Home rule status and the number of local governments within the US

30

The data on local government reveals substantial variation in the number and density of local government units even within US states and metropolitan areas. In this section we use variation in municipal home rule status—a proxy for the degree of political decentralization—to explore the effect of political decentralization on the number of local government units within US states, as well as the degree of metropolitan fragmentation across US metropolitan areas. Home-rule grants the citizens an explicit right to local self-government where they can alter, abolish and create new governments of their choice. Without home-rule, the structure of local governments can only be altered through the actions of state legislatures or constitutional amendments. Because home-rule significantly lowers the costs of creating local governments, the diversity and density of local government have increased greatly in states in which home-rule has been adopted (Ostrom, Bish and Ostrom, 1988). Because there are many dimensions to municipal home rule, there is no single, widely agreed-upon measure of home rule status. Various studies have categorized states according to the type and form of municipal home rule that is present. At one extreme, home rule status could imply significant local government autonomy in terms of form, function, and finances. At the other, home rule status may be met if Dillon’s rule does not apply within a state. For our purposes, we use an intermediate definition of home rule. We classify a state as having home rule status by a given year if the municipalities within the state have some degree of formal and functional home rule. Our information on municipal home rule within each state comes from Krane, Rigos, and Hill (2000).18 To investigate the effect of home rule status on the number of local government units within US states (N = 50), we estimated regressions similar to equation (1) except we omit the 18 By this definition AR, CA, CO, DE, ME, MN, MO, NJ, NY, ND, OH, TX and WI are classified as home rule states by 1950, and all of these states plus AK, FL, GA, IA, KS, MD, MA, and SD are counted as home rule states by 1970.

31

Canada indicator and replace it with a municipal home rule status indicator equal to 1 if the state has home rule status by 1950 or by 1970, and 0 otherwise. We estimate the equation separately for each decade from 1960 to 2000. For 1960 through 2000 we use home rule status in 1950 as our measure of political decentralization. For 1980 through 2000 we also use home rule status in 1970 to proxy for political decentralization. Our identification strategy is to use home rule status in earlier years since this provides a more plausibly exogenous source of variation in the extent of political decentralization. Coefficient estimates are displayed in Table 17. Each column represents a separate regression. The estimates show that for all years from 1980 to 2000, states that had implemented municipal home rule by 1950 or 1970 had more sub-county general-purpose local government units, controlling for other factors. This finding is consistent with the view that the decentralization of political power away from states and toward municipalities increases the number of local government units. As before, we find the number of local governments is increasing in latitude, decreasing in longitude, and increasing in both population and land area. Additionally, there is evidence that states that include a major port have fewer local governments, although the effect is not robust across years. Finally, years of settlement and civil law status do not have consistent, statistically significant effects on the number of local governments. In Table 17 we report coefficient estimates on the effect of home rule status on metropolitan fragmentation within US metropolitan areas (N = 314) in 1997. In Panel A the dependent variable is the log of the number of general-purpose local governments within each metropolitan area. In Panel B, the dependent variable is the number of local governments per 100,000 persons. These regressions are identical to those estimated using Canadian and US

32

metropolitan except that we replace the Canada indicator with the home rule indicator for either 1950 or 1970. In panel A, the coefficient on the home rule indicator is positive and significant in most regressions. In panel B, the coefficient is positive and significant in the baseline regression, and loses significance when more controls are included. Accordingly there is some evidence that home rule, by decentralizing political power away from state governments and toward local authorities, has contributed to greater metropolitan fragmentation within the US. The other covariates generally have the predicted signs and are, mostly, statistically significant. Metropolitan fragmentation is increasing in population and land area. As one moves north, fragmentation increases. As one moves west, fragmentation falls. Rivers increase metropolitan fragmentation; the presence of a major port decreases it. Finally, the degree metropolitan fragmentation within US metropolitan areas declines for political (national and state) capitals.

VI. Conclusion In the Americas, the diversity of European colonial experience and local conditions contributed to the emergence and persistence of a variety of institutional structures. These initial sets of institutions not only shaped the patterns of long-run development in the Americas, but also the structure of their regional and local economies. In much of Latin America, the Spanish and Portugese rule, in conjuction with factor endowments which fostered income inequality, has led to the emergence of non-democratic institutions where political power was centralized at the federal-level at the expense of regional and local levels. In North America, by contrast, British rule and factor endowment conditions which fostered relative equality led to the rise of democratic institutions and a federalist form of government which granted significant autonomy

33

to regional and local governments. Yet, even between US and Canada, their forms of federalism diverged causing significant differences in their patterns of urban and local development. In this paper, we present a variety of evidence that suggests that differences in the extent of national or regional political centralization, which has strong colonial roots, affects the degree of urban primacy, the size distribution of cities, and the number and mix of various local governments. First, political centralization at the national or regional levels is generally associated urban primacy or a skewed distribution of city sizes toward the largest cities. Second, political centralization is associated with a greater use of general general purpose (cities, counties, towns, etc.) as compared to special purpose (school districts, water, sewage districts, etc.) governments. Third, political centralization limits the number, density and the variety of local governments. Fourth, political centralization generally increases the jurisdictional land area of local governments. Because it is difficult to estimate the productivity of local governments, it is also challenging to determine the economic impact of institutions on local governments and their national economies. In comparing North America and Latin America, however, there is a general belief that political institutions mattered. In Latin America, political centralization at the national level often went hand in hand with the absence of voting rights, lower levels of investment in public schooling, fewer public goods, as well as weak local governments. In these countries, political centralization contributed to the rise of urban primacy, or unbalanced urban development. While estimates of the static costs of urban primacy might not be large, there are reasons to believe that dynamic costs might be fairly high, especially from the standpoint of (absent) innovations in political institutions and policies. For instance, in North America, gasoline taxes were first tried and implemented in Oregon but quickly spread to the rest of the

34

states, as well as to Canadian provinces. Likewise, the modern income tax was successfully implemented in Wisconsin before it spread elsewhere. Excessive political centralization may impede the ability of local or regional authorities to experiment with new institutions and new public policies. For the US and Canada, the difference, while significant, is one of degree rather than kind in terms of the level of decentralization between the federal and regional (state or provincial) governments, and especially between regional and local governments. For economists, the general benefits of centralization or consolidation include economies of scale and administration and tax collection, the capture of external economies, and perhaps a more equitable distribution of taxes and public spending. The costs are lack of competition, less “voting with one’s feet,” a weaker matching of preferences for local public goods, and less policy innovation and experimentation. Whether the proliferation of local governments in the US as compared to Canada is seen to increase welfare by facilitating the matching of local preferences to the provision of local public goods (Ostrom, Bish and Ostrom, 1988) or is seen to increase inequality and ultimate reduce welfare (Burns, 1994), it is likely that institutions play a non-neutral role in the long-run development of local and national economies.

35

References Acemoglu, Daron, Simon Johnson and James A. Robinson. 2001. “The Colonial Origins of Comparative Development: An Empirical Investigation,” American Economic Review 91: 1369-1401. Ades, A.F. and E.L. Glaeser. 1995. “Trade and Circuses: Explaining Urban Giants,” Quarterly Journal of Economics 110: 195-227. Anderson, William. 1949. The Units of Government in the United States: An Enumeration and Analysis. Chicago: Public Administration Service. Berkowitz, Daniel and Karen Clay. 2006. “The Effect of Judicial Independence on Courts: Evidence from the American States.” Journal of Legal Studies 35: 399-440. Bollens, John C. 1957. Special District Governments in the United States. Berkeley: University of California Press. Brownstone, Meyer and T. J. Plunkett. 1983. Metropolitan Winnipeg: Politics and Reform of Local Government. Berkeley: University of California Press. Bulmer-Thomas, Victor. 2003. The Economic History of Latin America Since Independence. Cambridge: Cambridge University Press. Burkholder, Mark A. and Lyman L. Johnson. 2008. Colonial Latin America. 6th Edition. New York: Oxford University Press. Burns, Nancy. 1994. The Formation of American Local Governments: Private Values in Public Institutions. New York: Oxford University Press. Burns, Nancy and Gerald Gamm. 1997. “Creatures of the State: State Politics and Local Government, 1871-1921,” Urban Affairs Review 33 (1): 59-96. Carroll, Glenn R. 1982. “National City-Size Distributions: What Do We Know After 67 Years of Research?” Progress in Human Geography 6: 1-43. Carroll, Glenn R. and John W. Meyer. 1983. “Capital Cities in the American Urban System: The Impact of State Expansion,” American Journal of Sociology 88 (3): 565-578. Chase-Dunn, Christopher. 1985. “The Coming of Urban Primacy in Latin America,” Comparative Urban Research 11: 14-31. Cortés Conde, Roberto. 2008. “Spanish America Colonial Patterns: The Rio de la Plata” Departamento De Economia, Universidad de San Andrés. Crawford, Kenneth G. 1954. Canadian Municipal Government. Toronto: Toronto University Press. De Luca, Miguel, Mark P. Jones and Mariá Inés Tula. 2002. “Buenos Aires: The Evolution of Local Governance,” in Capital City Politics in Latin America: Democratization and Empowerment, edited by D. Myers and H. Dietz. Boulder: Lynne Rienner Publishers. Diaz-Cayeros, Alberto. 2006. Federalism, Fiscal Authority, and Centralization in Latin America. Cambridge: Cambridge University Press. Eisenstadt, Shmuel N. and A. Shachar. 1987. “Urbanization in Colonial Latin America,” in Society, Culture and Urbanization, edited by S. Eisenstadt and A. Schachar. Newbury Park: Sage Publications. Elazar, Daniel J. 1972. American Federalism: A View from the States. Second Edition. New York: Harper & Row. Engerman, Stanley L. and Kenneth L. Sokoloff. 1997. “Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies: A View From Economic

36

Historians of the United States,” in How Latin America Fell Behind: Essays on the Economic Histories of Brazil and Mexico 1800-1914. Stanford University Press. Engerman, Stanley L. and Kenneth L. Sokoloff. 2002. “Factor Endowments, Inequality, and Paths of Development Among New World Economies,” Economia 3: 41-102. Fairlie, John A. 1908. Essays in Municipal Administration. New York: McMillan Company. Fairlie, John A. and Charles M. Kneier. 1930. County Government and Administration. New York: Century Company. Frug, Gerald E. 1999. City Making. Princeton: Princeton University Press. Gabaix, Xavier and Rustam Ibragimov. 2007. “Rank 1 – ½: A Simple Way to Improve the OLS Estimation of Tail Exponents.” NBER Technical Working Paper No. 342. Gabaix, Xavier and Yannis M. Ioannides. 2004. “The Evolution of City Size Distributions,” in Handbook of Regional and Urban Economics, Volume 4, J. V. Henderson and J-F. Thisse, eds. Amsterdam: North Holland. Goldberg, Michael A. and John Mercer. 1986. The Myth of the North American City: Continentalism Challenged. Vancouver: University of British Columbia Press. Hartog, Hendrik. 1983. Public Property and Private Power: The Corporation of the City of New York in American Law, 1730-1870. Ithaca: Cornell University Press. Henderson, J. Vernon. 2002. “Urbanization in Developing Countries,” World Bank Research Observer, vol. 17, no. 1: 89-112. Hill, Melvin B. 1978. State Laws Governing Local Government Structure and Administration. Athens: Institute of Government, University of Georgia. Kim, Sukkoo. 2008. “Urbanization,” New Palgrave Dictionary of Economics, 2nd edition. Kim, Sukkoo. 2009. “Institutions and U.S. Regional Development: A Study of Massachusetts and Virginia,” Journal of Institutional Economics 5 (2): 181-205. Kim, Sukkoo and Marc Law. 2010. “Political Institutions, Federalism and Urban Development: Evidence from the US and Canada,” mimeo. Krane, Dale, Platon N. Rigos and Melvin B. Hill Jr. 2001. Home Rule in America: A Fifty-State Handbook. Washington DC: Congressional Quarterly Inc. Krugman, Paul and Raul. E. Livas. 1996. “Trade Policy and the Third World Metropolis,” Journal of Development Economics 49: 137-150. Lattimer, John. 1990. “Intergovernmental Cooperation,” in Illinois Local Government: A Handbook, edited by J. Keane and G. Koch. Carbondale: Southern Illinois University Press. Lockhart, James and Stuart B. Schwartz. 1983. Early Latin America: A History of Colonial Spanish America and Brazil. Cambridge: Cambridge University Press. Lyman, Brad. 1992. “Colonial Governance in the Development of Urban Primacy,” Studies in Comparative International Development 27: 24-38. Mancke, Elizabeth. 2005. The Fault Lines of Empire: Political Differentiation in Massachusetts and Nova Scotia, CA. 1760-1830. New York: Routledge. McBain, Howard L. 1916. The Law and the Practice of Municipal Home Rule. New York: Columbia University Press. McGoldrick, Joseph D. 1933. Law and Practice of Municipal Home Rule 1916-1930. New York: Columbia University Press. McGreevey, William P. 1971. “A Statistical Analysis of Primacy and Lognormality in the Size Distribution of Latin American Cities, 1750-1960,” in Morse, Richard, editor, The Urban Development of Latin America 1750-1920. Stanford: Stanford University.

37

Miller, Gary J. 1981. Cities by Contract: The Politics of Municipal Incorporation. Cambridge: MIT Press. Moomaw, Ronald L. and Mohammed A. Alwosabi. 2004. “An Empirical Analysis of Competing Explanations of Urban Primacy Evidence from Asia and the Americas,” Annals of Regional Science 38: 149-171. Morse, Richard M. 1971. “Latin American Cities in the 19th Century: Approaches and Tentative Generalizations,” in Morse, Richard, editor, The Urban Development of Latin America 1750-1920. Stanford: Stanford University. Myers, David J. 2002. “The Dynamics of Local Empowerment: An Overview,” in Capital City Politics in Latin America: Democratization and Empowerment, edited by D. Myers and H. Dietz. Boulder: Lynne Rienner Publishers. Nickson, R. Andrew. 1995. Local Government in Latin America. Boulder: Lynne Rienner Publishers. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Ostrom, Vincent, Robert Bish, and Elinor Ostrom. 1988. Local Government in the United States. San Francisco: ICS Press. Portes, Alejandro. 1976. “The Economy and Ecology of Urban Poverty,” in Urban Latin America, edited by A. Portes and J. Walton. Austin: University of Texas Press. Rajan, Raghuram G. and Rodney Ramcharan. 2008. “Landed Interest and Financial Development in the United States,” NBER Working Paper #14347. Rose, Albert. 1972. Governing Metropolitan Toronto: A Social and Policy Analysis, 1953-1971. Berkeley: University of California Press. Rosen, Kenneth T. and Mitchel Resnick. 1980. “The Size Distribution of Cities: An Examination of the Pareto Law and Primacy,” Journal of Urban Economics 8: 165-86. Sancton, Andrew. 1985. Governing the Island of Montreal: Language Differences and Metropolitan Politics. Berkeley: University of California Press. Siavelis, Peter M., Esteban Valenzuela Van Treek, and Giorgio Martelli. 2002. “Santiago: Municipal Decentralization in a Centralized Political System,” in Capital City Politics in Latin America: Democratization and Empowerment, edited by D. Myers and H. Dietz. Boulder: Lynne Rienner Publishers. Smith, Carol A. 1985. “Class Relations and Urbanization in Guatemala: Toward an Alternative Theory of Urban Primacy,” in Urbanization in the World-Economy, edited by M. Timberlake. New York: Academic Press. Soo, Kwok Tong. 2005. “Zipf’s Law for Cities: A Cross-Country Investigation,” Regional Science and Urban Economics 35: 239-63. Sokoloff, Kenneth L. and Eric. M. Zolt. 2006. “Inequality and the Evolution of Institutions of Taxation: Evidence from the Economic History of the Americas,” mimeo. Sproule-Jones, Mark. 1993. The Pragmatics of Special Purpose Bodies: A Public Choice Analysis of Special Purpose Bodies in Canadian Urban Public Economies,” in Agencies, Boards and Commissions in Canadian Local Government, edited by D. Richmond and D. Seigel. Toronto: The Institute of Public Administration of Canada. Sublett, Michael D. 2004. Township: Diffusion and Persistence of Grassroots Government in Illinois, 1850-2000. New York: Peter Lang Publishing. Tremblay, Jean-François. 2006. “Fiscal Federalism and Public Service Provision in Canada,” mimeo.

38

Wallis, John J. 2000. “American Government Finance in the Long Run: 1790 to 1990,” Journal of Economic Perspectives 14: 61-82. Wheaton, W. and H. Shishido. 1981. “Urban Concentration, Agglomeration Economies and the Level of Economic Development,” Economic Development and Cultural Change 30: 1730. Wiesner, Eduardo. 2003. Fiscal Federalism in Latin America: From Entitlements to Markets. Washington DC: Inter-American Development Bank. Willis, Eliza, Christopher da C.B. Garman, and Stephen Haggard. 1999. “The Politics of Decentralization in Latin America,” Latin American Research Review 34: 7-56. Wilkie, James, Eduardo Aleman and Jose G. Ortega. 2000. Statistical Abstract of Latin America. Volume 36. Los Angeles: UCLA Latin American Center Publications. Winters, John M. 1961. State Constitutional Limitations on Solutions of Metropolitan Area Problems. Anne Arbor: Michigan Legal Publications. Zimmerman, Joseph F. 1981. Measuring Local Discretionary Authority. Washington DC: U.S. Advisory Commission on Intergovernmental Relations.

39

Table 1 Political Centralization in Latin America circa 1995 ________________________________________________________________________________________________________________________ Country

Constitutional Structure

Selection of Executive Democratic Formal Overide Provincial Local Transition Authority ________________________________________________________________________________________________________________________ Centralized Costa Rica Unitary Appointed Elected (1970) 1948 Yes Dominican R. Unitary Appointed Elected 1966 Yes Ecuador Unitary Elected/App. Elected 1978 Yes El Salvador Unitary Appointed Elected 1982-1984 Yes Guatemala Unitary Appointed Elected (1985) 1985 Yes Panama Unitary Appointed Elected (1994) 1990-1994 Yes Paraguay Unitary Appointed Elected (1991) 1991 Yes Moderately Centralized Bolivia Unitary Chile Unitary Honduras Unitary Nicaragua Unitary Peru Unitary Uruguay Unitary

Appointed Appointed Appointed Appointed None Elected (1984)

Elected (1987) Elected (1992) Elected (1990) Elected (1992) Elected (1987) None

1985 1990 1986-1990 1990 1980 1984

No No No No No -

Decentralized Argentina Federal Elected (1983) Elected (1983) 1983 No Brazil Federal Elected (1982) Elected (1982) 1985 No Colombia Unitary Elected (1992) Elected (1988) No Mexico Federal Elected Elected No Venezuela Federal Elected 91989) Elected (1989) No ________________________________________________________________________________________________________________________ Source: Willis et. al (1999), Nickson (1995).

40

Table 2 Political Centralization of Capital Cities and Other Municipalities, 1944-1962 and 1978-1990 ________________________________________________________________________________________________________________________ 1944-1967 Selection of Capital Mayor Selection of Other City Mayors Power Sharing with Municipal Council Centralized Elected Appointed Elected Appointed Mixed Mexico X X No Peru X X Yes Colombia X X Yes Argentina X X Partial Brazil (Rio de J.) X X Yes Brazil (Brazilia) X X Yes Venezuela X X Partial Less Centralized Guatemala X X Yes Cuba X X Some Chile X X Yes Brazil (Sao Paulo) X X Yes ________________________________________________________________________________________________________________________ 1978-1990s Selection of Capital Mayor Selection of Other City Mayors Muncipal Council Powers Centralized Elected Appointed Elected Appointed Mixed Increase Decrease No Change Cuba X X X Argentina X X X Less Centralized Mexico X X X Peru X X X Guatemala X X X Brazil (Rio de J.) X X X Brazil (Brazilia) X X X Brazil (Sao Paulo) X X X Colombia X X X Venezuela X X X Chile X X X ________________________________________________________________________________________________________________________ Source: Myers (2002).

41

Table 3: Urban Primacy in the Americas, 1750-1920 (Percent of total population in largest city) Country 1750 1780 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 ____________________________________________________________________________________________________________ Argentina 13 12 10 8 7 10 17 20 Bolivia Brazil 3 2 2 2 3 4 4 4 Chile 11 8 6 7 6 7 7 9 10 14 Colombia 2 3 2 1 2 2 Costa Rica Cuba 19 13 12 16 14 14 El Salvador Equador Guatemala Honduras Mexico 3 2 2 2 3 4 Nicaragua Panama Paraguay Peru 5 4 3 5 Uruguay Venezuela 7 4 5 3 3 3 4 Canada 5 7 7 United States 4 5 5 __________________________________________________________________________________________________________ Source: Morse (1971) plus calculations by authors for Canada and the US.

42

Table 4: Urban Primacy in the Americas (percent share of urban population of the largest city) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Canada >2,500 >25,000 31.7 30.1 27.7 26.1 24.0 21.8 17.4 11.3 7.4 18.0 United States >2,500 >25,000 17.4 17.5 15.3 14.6 14.1 12.8 10.2 9.0 7.6 7.0 6.8 __________________________________________________________________________________________________________ Argentina >2,500 10.7 16.9 20.1 18.9 14.9 12.8 10.5 9.1 7.7 >25,000 64.1 45.6 29.5 22.1 18.1 14.8 11.7 10.0 8.3 Bolivia >2,500 19.0 16.6 21.5 22.8 >25,000 23.1 19.8 23.5 24.2 Brazil >2,500 6.6 6.2 >25,000 9.2 8.1 Chile >2,500 12.6 11.2 8.7 6.6 2.5 3.3 >25,000 25.4 19.1 12.7 8.5 3.0 3.9 >2,500# 23.8 28.0 31.1 39.1 32.4 30.9 >25,000# 44.2 45.2 44.0 49.5 39.2 36.8 Colombia >2,500 3.9 16.3 >25,000 14.3 20.5 __________________________________________________________________________________________________________

43

Table 4: Urban Primacy in the Americas - continued (percent share of urban population of the largest city) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Costa Rica >2,500 21.1 17.8 16.3 13.3 14.0 12.6 11.5 10.0 8.1 >25,000 19.3 13.6 9.3 Cuba >2,500 13.4 12.6 13.7 13.4 >25,000 28.4 21.5 18.9 17.0 El Salvador >2,500 8.1 9.9 10.6 9.7 8.2 >25,000 27.9 20.4 13.0 Equador >2,500 12.7 17.5 16.1 16.7 >25,000 14.8 19.3 18.9 18.9 Guatemala >2,500 8.5 9.5 5.8 10.2 12.5 8.4 >25,000 19.0 33.4 23.9 10.9 Honduras >2,500 9.3 14.1 >25,000 33.1 22.5 Mexico >2,500 14.3 14.3 8.5 >25,000 24.6 20.2 9.9 Nicaragua >2,500 18.6 20.7 >25,000 46.6 28.2 __________________________________________________________________________________________________________

44

Table 4: Urban Primacy in the Americas - continued (percent share of urban population of the largest city) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Panama >2,500 28.7 29.6 26.7 35.4 29.4 >25,000 51.7 47.7 38.4 33.4 47.1 Paraguay >2,500 15.2 12.3 9.9 >25,000 28.8 21.1 15.0 Peru >2,500 8.4 19.0 26.8 26.7 27.5 >25,000 9.1 19.8 27.4 27.4 28.0 Uruguay >2,500 25.8 25.2 >25,000 30.7 46.8 44.8 44.4 42.5 40.9 Venezuela >2,500 8.3 10.6 10.1 8.0 >25,000 14.1 16.2 11.8 8.8 __________________________________________________________________________________________________________ Primate cities are as follows: Montreal (1900-1990) and Toronto (2000), Canada; Mexico City, Mexico; New York City (+ includes Brooklyn), USA; Buenos Aires, Argentina; Santa Cruz, Bolivia; Sao Paulo, Brasil; Santiago, Chile; Bogota, Colombia; San Jose, Costa Rica; Habana, Cuba; San Salvador, El Salvador; Guayaquil, Equador; Guatemala City, Guatemala; Tegucigalpa (Distrio Central), Honduras; Managua, Nicaragua; Panama City, Panama; Asuncion, Paraguay; Lima, Peru; Montevideo, Uruguay; Caracas, Venezuela. All of the primate cities are national capitals except for Sao Paulo, Brasil (Brasilia since 1960 and Rio de Janeiro from 1763-1960), Toronto, Canada (Ottawa), New York, USA (Washington DC) and Guayaquil, Equador (Quito); ** Uruguay’s sample of cities consists of 19 largest cities.

45

Table 5: Size Distribution of Cities in the Americas (Pareto coefficient estimates of log rank on log population) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Canada >2,500 >25,000 0.94 0.86 0.85 0.86 0.91 0.95 1.05 1.05 1.11 1.05 United States >2,500 >25,000 1.06 1.07 1.08 1.10 1.11 1.10 1.18 1.22 1.27 1.28 1.27 __________________________________________________________________________________________________________ Argentina >2,500 1.69 1.29 1.03 0.87 0.84 0.79 0.75 0.74 0.73 >25,000 1.00 1.40 1.24 1.19 1.12 1.06 1.05 1.04 Bolivia >2,500 0.99 0.96 0.65 0.75 >25,000 1.54 1.31 0.65 0.99 Brasil >2,500 0.96 0.92 >25,000 1.21 1.17 Chile >2,500 1.19 1.10 1.00 0.86 0.80 0.80 >25,000 1.35 1.36 1.31 1.19 1.16 1.15 Colombia >2,500 1.43 0.93 >25,000 1.53 1.06 Costa Rica >2,500 1.12 1.20 1.25 1.33 1.24 1.10 1.11 1.04 1.01 >25,000 1.56 1.58 1.49 __________________________________________________________________________________________________________

46

Table5: Size Distribution of Cities in the Americas - continued (Pareto coefficient estimates of log rank on log population) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Cuba >2,500 1.19 1.25 1.13 1.02 >25,000 1.21 1.55 1.43 1.28 El Salvador >2,500 1.44 1.32 1.20 1.10 0.99 >25,000 1.22 1.42 1.34 Equador >2,500 1.01* 0.87 0.85* 0.89 0.84 0.81 >25,000 1.17* 1.36 0.96* 1.09 1.15 1.11 Guatemala >2,500 1.41 1.48 1.28 1.35 1.15 1.07 >25,000 1.69 0.92 1.56 1.66 Honduras >2,500 1.41 1.03 >25,000 1.13 Mexico >2,500 1.08 0.98 0.81 >25,000 1.42 1.31 1.12 Nicaragua >2,500 1.14 0.96 >25,000 1.31 Panama >2,500 1.08 1.00 0.95 0.84 0.88 >25,000 0.98 0.93 __________________________________________________________________________________________________________

47

Table 5: Size Distribution of Cities in the Americas - continued (Pareto coefficient estimates of log rank on log population) Country 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 __________________________________________________________________________________________________________ Paraguay >2,500 1.08 1.01 0.95 >25,000 1.31 1.35 1.30 Peru >2,500 1.06 1.03 0.91 0.88 0.87 >25,000 1.59 1.38 1.17 1.14 1.11 Uruguay** >2,500 1.55 >25,000 1.30 0.95 0.95 0.94 0.89 0.89 Venezuela >2,500 1.13 1.13 0.86 0.87 >25,000 1.59 1.71 1.17 1.14 __________________________________________________________________________________________________________ Note: Mexico City is defined as Distrito Federal and includes the 16 boroughs. ** Uruguay’s sample of cities consist of the 19 largest cities.

48

Figure 1: Urban Primacy in the US and Canada: Percent of total population in the largest city and metro 18 16

Percent of total population

14 12 10

Largest City_US Largest Metro_US

8

Largest City_CAN Largest Metro_CAN

6 4 2 0 1900

1910

1920

1930

1940

1950

1960

Year

49

1970

1980

1990

2000

Table 6: Pareto exponent for US and Canada, 1900-2000 using log(rank) as dependent variable Panel A: US and Canadian cities 1900 US 1.06 Pop>25K (0.01) N=160

1910 1.07 (0.01) N=184

1920 1.08 (0.01) N=252

1930 1.10 (0.01) N=310

1940 1.11 (0.01) N=410

1950 1.10 (0.01) N=478

1960 1.18 (0.01) N=674

1970 1.22 (0.01) N=839

1980 1.27 (0.01) N=952

Canada 0.94 Pop>25K (0.10) N=10

0.86 (0.07) N=14

0.85 (0.06) N=18

0.86 (0.04) N=24

0.91 (0.03) N=34

0.95 (0.02) N=43

1.05 (0.05) N=72

1.05 (0.03) N=100

1.11 (0.04) N=125

1.05 (0.02) N=145

Canada Pop>5K

1.00 (0.03) N=85

0.98 (0.02) N=109

0.95 (0.01) N=134

0.95 (0.01) N=149

1.00 (0.01) N=203

0.99 (0.03) N=306

0.93 (0.02) N=353

0.91 (0.02) N=404

0.87 (0.01) N=467

1.00 (0.03) N=56

1990 1.28 (0.01) N=1077

2000 1.27 (0.01) N=1065

Panel B: Largest 50 US and Canadian cities

US

Canada

1900 1.05 (0.02)

1910 1.07 (0.03)

1920 1.10 (0.03)

1930 1.11 (0.03)

1940 1.10 (0.03)

1950 1.16 (0.04)

1960 1.26 (0.05)

1970 1.31 (0.06)

1980 1.33 (0.06)

0.99 (0.04)

0.94 (0.03)

0.95 (0.04)

0.92 (0.03)

0.94 (0.02)

0.96 (0.02)

0.85 (0.19)

1.16 (0.04)

1.17 (0.07)

50

1990 1.36 (0.06)

2000 1.37 (0.06) 1.08 (0.03)

Panel C: Largest 100 US and Canadian cities

US

Canada

1900 1.05 (0.02)

1910 1.09 (0.02)

1920 1.10 (0.02)

1930 1.10 (0.01)

1940 1.10 (0.02)

1950 1.10 (0.02)

1960 1.17 (0.02)

1970 1.21 (0.02)

1980 1.28 (0.03)

0.98 (0.03)

0.95 (0.02)

0.96 (0.01)

1.00 (0.01)

1.01 (0.10)

1.05 (0.03)

1.13 (0.04)

51

1990 1.33 (0.03)

2000 1.33 (0.03) 1.10 (0.02)

Table 7: Pareto exponent for US and Canada, 1900-2000 using log(rank – ½) as the dependent variable Panel A: US and Canadian cities 1900 US 1.11 Pop>25K (0.02) N=160

1910 1.11 (0.01) N=184

1920 1.12 (0.01) N=252

1930 1.13 (0.01) N=310

1940 1.13 (0.01) N=410

1950 1.12 (0.01) N=478

1960 1.19 (0.01) N=674

1970 1.24 (0.01) N=839

1980 1.28 (0.01) N=952

Canada 1.17 Pop>25K (0.17) N=10

1.04 (0.11) N=14

0.99 (0.10) N=18

0.98 (0.07) N=24

1.01 (0.05) N=34

1.05 (0.05) N=43

1.13 (0.06) N=72

1.11 (0.05) N=100

1.16 (0.05) N=125

1.10 (0.02) N=145

Canada Pop>5K

1.06 (0.03) N=85

1.04 (0.03) N=109

1.00 (0.02) N=134

1.00 (0.02) N=149

1.05 (0.01) N=203

1.02 (0.03) N=306

0.95 (0.02) N=353

0.92 (0.02) N=404

0.90 (0.01) N=467

1.09 (0.04) N=56

1990 1.30 (0.01) N=1077

2000 1.29 (0.01) N=1065

Panel B: Largest 50 US and Canadian cities

US Canada

1900 1.16 (0.03) 1.08 (0.05)

1910 1.18 (0.02) 1.03 (0.04)

1920 1.20 (0.02) 1.04 (0.05)

1930 1.21 (0.02) 1.01 (0.04)

1940 1.22 (0.02) 1.03 (0.04)

1950 1.28 (0.02) 1.05 (0.04)

52

1960 1.38 (0.02) 0.93 (0.21)

1970 1.45 (0.03) 1.26 (0.07)

1980 1.47 (0.04) 1.26 (0.01)

1990 1.50 (0.04)

2000 1.50 (0.02) 1.17 (0.03)

Panel C: Largest 100 US and Canadian cities

US Canada

1900 1.11 (0.02)

1910 1.15 (0.02)

1920 1.16 (0.02) 1.04 (0.03)

1930 1.17 (0.01) 1.00 (0.02)

1940 1.16 (0.01) 1.01 (0.02)

1950 1.16 (0.02) 1.07 (0.03)

53

1960 1.24 (0.02) 1.07 (0.10)

1970 1.28 (0.02) 1.11 (0.05)

1980 1.36 (0.02) 1.20 (0.06)

1990 1.41 (0.02)

2000 1.41 (0.01) 1.17 (0.02)

Table 8: Pareto exponent for US and Canadian regions, 1900-2000 using log(rank) as the dependent variable Panel A: US Regions using cities with population greater than 25,000

New England Mid Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific

1900 a 1.27 (0.09) 0.81 (0.05) 0.82 (0.03) 0.90 (0.03) 0.84 (0.04) 1.12 (0.05) 0.80 (0.10 0.82 (0.08) 0.87 (0.04)

N 30 40 31 18 11 11 7 4 8

1920 A 1.25 (0.06) 0.86 (0.05) 0.93 (0.02) 0.90 (0.04) 1.03 (0.04) 1.07 (0.14) 1.10 (0.05) 0.80 (0.05) 0.81 (0.08)

N 39 56 61 19 47 11 16 7 15

1940 a 1.31 (0.05) 0.92 (0.06) 1.02 (0.03) 0.89 (0.03) 1.12 (0.04) 0.92 (0.09) 0.95 (0.06) 0.95 (0.06) 0.83 (0.02)

N 60 79 101 31 47 20 29 11 33

54

1960 a 1.40 (0.06) 0.96 (0.07) 1.16 (0.04) 1.03 (0.04) 1.13 (0.02) 1.04 (0.05) 0.97 (0.04) 1.01 (0.05) 1.10 (0.03)

N 64 94 155 53 77 38 63 31 97

1980 a 1.54 (0.07) 1.00 (0.10 1.30 (0.04) 1.23 (0.05) 1.20 (0.03) 0.97 (0.05) 1.01 (0.02) 1.14 (0.02) 1.28 (0.03)

N 69 92 206 78 116 46 89 61 187

2000 a 1.52 (0.07) 0.98 (0.11) 1.35 (0.05) 1.29 (0.05) 1.27 (0.04) 1.03 (0.05) 1.02 (0.02) 1.07 (0.04) 1.29 (0.02)

N 71 84 214 85 141 47 104 71 249

Panel B: Canadian regions using cities with population greater than 25,000 1900 a

N

West Ontario

0.78 (0.08)

4

Quebec

1920 A 0.98 (0.08) 0.63 (0.02) 0.34 (0.01)

N 7 6 3

Atlantic

1940 a 0.90 (0.13) 0.78 (0.05) 0.56 (0.06) 1.19 (0.19)

N 7 15 8 4

1960 a 0.76 (0.10) 0.93 (0.12) 0.92 (0.17) 1.52 (0.22)

N 15 26 24 7

1980 a 0.85 (0.07) 1.00 (0.06) 1.20 (0.12) 1.41 (0.31)

N 27 50 41 7

2000 a 0.86 (0.06) 0.94 (0.02) 1.27 (0.12) 0.78 (0.55)

N 30 60 49 6

Panel B: Canadian regions using cities with population greater than 5,000

West Ontario Quebec Atlantic

1900 a 0.74 (0.11) 0.97 (0.06) 0.60 (0.05) 0.93 (0.15)

N 7 28 11 10

1920 A 0.77 (0.04) 0.93 (0.06) 0.77 (0.10) 1.11 (0.07)

N 20 46 25 18

1940 a 0.70 (0.04) 0.92 (0.03) 0.85 (0.09) 1.08 (0.05)

N 27 62 40 20

55

1960 a 0.83 (0.04) 0.84 (0.06) 1.11 (0.08) 0.96 (0.10)

N 56 94 123 32

1980 a 0.77 (0.03) 0.78 (0.03) 1.03 (0.03) 1.05 (0.05)

N 87 124 147 44

2000 a 0.78 (0.02) 0.76 (0.02) 1.07 (0.03) 0.94 (0.04)

N 114 131 180 40

Table 9: Pareto exponent for US and Canadian regions 1900-2000 using log(rank – ½) as dependent variable Panel A: US Regions using cities with population greater than 25,000

New England Mid Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific

1900 a 1.44 (0.06) 0.91 (0.03) 0.92 (0.04) 1.05 (0.06) 1.04 (0.08) 1.39 (0.05) 1.08 (0.10) 1.18 (0.08) 1.12 (0.05)

N 30 40 31 18 11 11 7 4 8

1920 A 1.39 (0.06) 0.94 (0.03) 1.01 (0.02) 1.04 (0.08) 1.17 (0.05) 1.30 (0.22) 1.29 (0.10) 1.05 (0.07) 0.95 (0.13)

N 39 56 61 19 47 11 16 7 15

1940 a 1.42 (0.04) 0.99 (0.04) 1.09 (0.02) 1.00 (0.07) 1.23 (0.05) 1.05 (0.13) 1.06 (0.10) 1.18 (0.05) 0.93 (0.04)

N 60 79 101 31 47 20 29 11 33

56

1960 a 1.52 (0.06) 1.03 (0.05) 1.21 (0.02) 1.12 (0.06) 1.20 (0.05) 1.15 (0.08) 1.04 (0.06) 1.14 (0.09) 1.17 (0.02)

N 64 94 155 53 77 38 63 31 97

1980 a 1.66 (0.08) 1.08 (0.08) 1.35 (0.03) 1.31 (0.07) 1.26 (0.05) 1.06 (0.08) 1.08 (0.04) 1.23 (0.05) 1.34 (0.02)

N 69 92 206 78 116 46 89 61 187

2000 a 1.66 (0.07) 1.05 (0.9) 1.41 (0.03) 1.36 (0.08) 1.32 (0.05) 1.12 (0.08) 1.07 (0.04) 1.14 (0.06) 1.33 (0.02)

N 71 84 214 85 141 47 104 71 249

Panel B: Canadian regions using cities with population greater than 25,000 1900 a

N

West Ontario

1.12 (0.08)

4

Quebec

1920 A 1.26 (0.17) 0.85 (0.03) 0.51 (0.04)

N 7 6 3

Atlantic

1940 a 1.15 (0.22) 0.95 (0.04) 0.74 (0.05) 1.65 (0.32)

N 7 15 8 4

1960 a 0.89 (0.14) 1.08 (0.14) 1.09 (0.15) 1.97 (0.36)

N 15 26 24 7

1980 a 0.96 (0.11) 1.07 (0.09) 1.35 (0.09) 1.79 (0.48)

N 27 50 41 7

2000 a 0.95 (0.09) 1.02 (0.03) 1.41 (0.09) 1.05 (0.05)

N 30 60 49 6

Panel B: Canadian regions using cities with population greater than 5,000

West Ontario Quebec Atlantic

1900 a 0.95 (0.18) 1.11 (0.04) 0.76 (0.04) 1.15 (0.23)

N 7 28 11 10

1920 A 0.89 (0.08) 1.03 (0.03) 0.90 (0.09) 1.30 (0.11)

N 20 46 25 18

1940 a 0.79 (0.07) 0.99 (0.02) 0.96 (0.07) 1.26 (0.10)

N 27 62 40 20

57

1960 a 0.90 (0.06) 0.89 (0.07) 1.18 (0.06) 1.07 (0.13)

N 56 94 123 32

1980 a 0.82 (0.04) 0.81 (0.04) 1.08 (0.03) 1.15 (0.08)

N 87 124 147 44

2000 a 0.81 (0.03) 0.79 (0.03) 1.11 (0.03) 1.04 (0.02)

N 114 131 180 40

Table 10: Number and density of local government units in Canadian provinces, 19602000 Panel A: Number of local government units

Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Ontario PEI Quebec Saskatchewan Canada

1960 360 126 206 179 88 938 94 1684 798

1970 390 232 274 277 321 110 916 104 1654 839

1980 416 285 282 285 403 113 932 112 1619 889

1990 394 406 270 277 389 107 878 124 1516 861

2000 452 816 298 275 381 98 586 113 1476 1002

4473

5117

5336

5222

5497

Panel B: Number of local government units per 1,000 persons

Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Ontario PEI Quebec Saskatchewan Canada

1960 0.27 0.08 0.22 0.30 0.19 0.15 0.90 0.32 0.86

1970 0.24 0.11 0.28 0.44 0.61 0.14 0.12 0.93 0.27 0.91

1980 0.19 0.10 0.28 0.41 0.71 0.13 0.11 0.91 0.25 0.92

1990 0.15 0.12 0.25 0.38 0.68 0.12 0.09 0.96 0.22 0.87

2000 0.15 0.21 0.27 0.38 0.74 0.11 0.05 0.93 0.20 1.02

0.25

0.24

0.22

0.19

0.18

58

Panel C: Number of local government units per 1,000 square miles

Alberta British Columbia Manitoba New Brunswick Newfoundland Nova Scotia Ontario PEI Quebec Saskatchewan Canada

1960 1.45 0.35 0.96 6.49 0.61 2.65 43.02 3.19 3.49

1970 1.57 0.65 1.28 10.04 2.22 5.34 2.59 47.6 3.14 3.67

1980 1.58 0.80 1.32 10.33 2.79 5.49 2.63 51.26 3.07 3.89

1990 1.59 1.14 1.26 10.04 2.69 5.20 2.48 56.75 2.87 3.77

2000 1.82 2.28 1.39 9.97 2.64 4.76 1.65 51.72 2.80 4.39

2.1

2.41

2.51

2.46

2.59

Notes: 1. The number of local government units is estimated by the number of Statistics Canada Census Subdivisions. 2. The total for Canada excludes the territories (Yukon, Northwest Territories, and Nunavut), which are under federal jurisdiction.

59

Table 11: Local government units in the United States, 1952-2002 Panel A: Sub-county level general purpose local government units (cities, towns and townships) State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 302 28 48 360 306 241 185 49 294 475 1 193 2590 1549 934 2119 313 215 263 146 351 1753 2640 263 1110 121 1010 15 234 567 72 1542 401 1741 2242 499 208 2554 39 239 1397 241 738 209 309 223 310 216 1815 86 33756

1962 349 40 61 417 373 253 186 51 366 561 1 200 2684 1555 944 2164 365 258 266 152 351 1768 2667 266 1221 124 1015 17 234 567 80 1544 449 1743 2260 533 222 2558 39 255 1379 280 866 212 306 236 329 224 1834 90 34915

1972 396 112 65 454 407 258 183 52 390 530 1 197 2699 1554 951 2143 378 287 270 151 351 1780 2652 270 1237 126 1013 17 237 567 89 1549 454 1726 2256 547 231 2564 39 262 1342 316 981 214 298 231 305 226 1838 87 35283

60

1982 434 142 76 472 428 267 182 56 391 533 1 198 2714 1572 955 1994 424 301 292 152 351 1777 2650 292 1251 126 1005 17 234 568 96 1543 484 1725 2259 581 241 2568 39 265 1308 335 1121 224 294 229 265 231 1849 91 35603

1992 438 148 86 489 460 266 178 57 390 536 1 199 2715 1574 952 1980 435 301 490 155 351 1776 2657 294 1257 128 986 18 234 567 98 1548 516 1714 2256 588 239 2570 39 269 1279 339 1171 228 287 230 268 231 1849 97 35934

2002 451 149 87 499 475 270 179 57 404 531 1 200 2722 1575 948 1926 424 302 489 157 351 1775 2647 296 1258 129 977 19 234 566 101 1545 541 1692 2250 590 240 2546 39 269 1248 349 1196 236 284 229 279 234 1850 98 35914

Panel B: Special districts State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI

1952 70 11 34 231 1390 297 166 40 188 154 10 395 1546 293 170 724 130 144 128 158 220 84 71 254 886 133 485 44 78 81 78 968 94 94 140 94 407 29 49 78 56 85 491 106 70 42 644 23 73

1962 202 6 52 299 1962 566 204 63 264 301 16 469 2126 560 263 880 179 241 125 176 194 99 115 266 742 192 752 85 85 295 102 970 246 246 177 124 727 1398 56 142 80 268 733 142 72 46 867 55 68

1972 286 90 366 2223 812 231 78 315 366 15 543 2407 832 305 1136 446 419 126 229 268 139 211 282 820 258 1081 134 94 341 99 954 561 561 275 402 826 1777 73 182 136 457 1215 176 74 58 1021 172 121

1982 390 6 130 505 2506 1030 281 139 417 390 14 659 2602 897 361 1370 517 39 195 264 354 184 356 315 1195 450 1157 134 113 454 101 923 692 692 377 406 825 2050 80 242 199 469 1681 211 83 83 1130 292 263

1992 487 14 261 561 2797 1252 368 196 462 421 16 728 2920 939 388 1482 590 30 199 223 396 277 377 320 1386 556 1047 156 116 374 116 980 722 722 513 524 835 2006 83 291 262 477 2266 329 104 129 1157 350 377

2002 525 14 305 704 2830 1414 384 260 626 581 15 798 3145 1125 542 1533 720 45 222 85 403 366 403 458 1514 592 1146 158 148 276 628 1135 319 764 631 560 927 1885 75 301 376 475 2245 300 152 196 1173 342 684

WY USA

91 12327

144 18442

203 24196

225 28448

373 31955

546 35051

61

Panel C: Sub-county general purpose local governments plus special districts State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 372 39 82 591 1696 538 351 89 482 629 11 588 4136 1842 1104 2843 443 359 391 304 571 1837 2711 517 1996 254 1495 59 312 648 150 2510 495 1835 2382 593 615 2583 88 317 1453 326 1229 315 379 265 954 239 1888 177 46083

1962 551 46 113 716 2335 819 390 114 630 862 17 669 4810 2115 1207 3044 544 499 391 328 545 1867 2782 532 1963 316 1767 102 319 862 182 2514 695 1989 2437 657 949 3956 95 397 1459 548 1599 354 378 282 1196 279 1902 234 53357

1972 682 112 155 820 2630 1070 414 130 705 896 16 740 5106 2386 1256 3279 824 706 396 380 619 1919 2863 552 2057 384 2094 151 331 908 188 2503 1015 2287 2531 949 1057 4341 112 444 1478 773 2196 390 372 289 1326 398 1959 290 59479

62

1982 824 148 206 977 2934 1297 463 195 808 923 15 857 5316 2469 1316 3364 941 340 487 416 705 1961 3006 607 2446 576 2162 151 347 1022 197 2466 1176 2417 2636 987 1066 4618 119 507 1507 804 2802 435 377 312 1395 523 2112 316 64051

1992 925 162 347 1050 3257 1518 546 253 852 957 17 927 5635 2513 1340 3462 1025 331 689 378 747 2053 3034 614 2643 684 2033 174 350 941 214 2528 1238 2436 2769 1112 1074 4576 122 560 1541 816 3437 557 391 359 1425 581 2226 470 67889

2002 976 163 392 1203 3305 1684 563 317 1030 1112 16 998 5867 2700 1490 3459 1144 347 711 242 754 2141 3050 754 2772 721 2123 177 382 842 729 2680 860 2456 2881 1150 1167 4431 114 570 1624 824 3441 536 436 425 1452 576 2534 644 70965

Table 12: Density of local government in the United States, 1950-2000 Panel A: Sub-county general purpose local government per 1,000 population State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 0.10 0.04 0.07 0.19 0.03 0.19 0.10 0.16 0.11 0.14 0.01 0.33 0.30 0.40 0.36 1.12 0.11 0.09 0.29 0.07 0.08 0.28 0.89 0.13 0.29 0.21 0.77 0.10 0.44 0.12 0.11 0.11 0.10 2.81 0.29 0.23 0.14 0.25 0.05 0.12 2.15 0.08 0.10 0.31 0.82 0.07 0.14 0.11 0.53 0.30 0.23

1962 0.11 0.03 0.05 0.23 0.02 0.14 0.07 0.11 0.07 0.14 0.01 0.30 0.27 0.33 0.34 0.99 0.12 0.08 0.27 0.05 0.07 0.23 0.78 0.12 0.28 0.18 0.72 0.06 0.39 0.09 0.08 0.09 0.10 2.76 0.23 0.23 0.13 0.23 0.05 0.11 2.03 0.08 0.09 0.24 0.78 0.06 0.12 0.12 0.46 0.27 0.19

1972 0.12 0.07 0.04 0.24 0.03 0.12 0.07 0.10 0.06 0.12 0.01 0.28 0.25 0.30 0.34 0.96 0.12 0.08 0.28 0.04 0.07 0.21 0.70 0.13 0.27 0.19 0.69 0.04 0.33 0.08 0.09 0.09 0.09 2.80 0.22 0.22 0.12 0.22 0.05 0.11 2.02 0.09 0.09 0.21 0.68 0.05 0.09 0.13 0.42 0.27 0.18

63

1982 0.12 0.06 0.03 0.21 0.02 0.10 0.06 0.10 0.05 0.10 0.01 0.21 0.24 0.29 0.33 0.85 0.12 0.08 0.26 0.04 0.07 0.20 0.66 0.12 0.26 0.17 0.65 0.03 0.26 0.08 0.08 0.09 0.09 2.65 0.21 0.20 0.10 0.22 0.05 0.09 1.90 0.08 0.08 0.16 0.58 0.05 0.07 0.12 0.40 0.20 0.16

1992 0.11 0.05 0.03 0.21 0.02 0.09 0.06 0.09 0.04 0.09 0.01 0.2 0.24 0.29 0.35 0.80 0.12 0.08 0.40 0.04 0.06 0.20 0.61 0.12 0.25 0.17 0.63 0.02 0.22 0.08 0.07 0.09 0.08 2.69 0.21 0.19 0.09 0.22 0.04 0.08 1.84 0.07 0.07 0.14 0.51 0.04 0.06 0.13 0.38 0.22 0.15

2002 0.11 0.24 0.02 0.19 0.02 0.07 0.06 0.08 0.03 0.07 0.01 0.16 0.22 0.26 0.33 0.72 0.11 0.07 0.39 0.03 0.06 0.18 0.54 0.11 0.23 0.15 0.58 0.01 0.19 0.07 0.06 0.09 0.07 2.64 0.2 0.18 0.08 0.21 0.04 0.07 1.66 0.07 0.06 0.11 0.47 0.04 0.05 0.13 0.35 0.20 0.13

Panel B: Sub-county general purpose local governments plus special districts per 1,000 population State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 0.13 0.06 0.11 0.31 0.17 0.41 0.18 0.28 0.18 0.19 0.03 1.00 0.48 0.47 0.43 1.50 0.16 0.14 0.43 0.13 0.13 0.29 0.91 0.24 0.51 0.43 1.13 0.37 0.59 0.14 0.23 0.17 0.13 2.97 0.30 0.27 0.41 0.25 0.12 0.15 2.23 0.10 0.16 0.46 1.01 0.08 0.41 0.12 0.55 0.61 0.31

1962 0.17 0.04 0.09 0.41 0.15 0.47 0.16 0.26 0.13 0.22 0.03 1.01 0.48 0.46 0.44 1.4 0.18 0.16 0.41 0.11 0.11 0.24 0.82 0.25 0.46 0.47 1.26 0.36 0.53 0.15 0.2 0.15 0.16 3.15 0.26 0.29 0.54 0.35 0.12 0.17 2.15 0.16 0.17 0.4 0.97 0.08 0.42 0.15 0.49 0.71 0.30

1972 0.2 0.07 0.09 0.43 0.14 0.49 0.14 0.24 0.11 0.2 0.03 1.04 0.46 0.46 0.45 1.46 0.26 0.2 0.4 0.1 0.11 0.22 0.76 0.25 0.44 0.56 1.42 0.31 0.45 0.13 0.19 0.14 0.2 3.71 0.24 0.38 0.51 0.37 0.12 0.18 2.23 0.20 0.20 0.37 0.84 0.07 0.39 0.23 0.45 0.88 0.30

64

1982 0.22 0.06 0.08 0.43 0.13 0.45 0.15 0.33 0.09 0.17 0.02 0.91 0.47 0.45 0.46 1.43 0.26 0.09 0.44 0.10 0.13 0.22 0.74 0.25 0.50 0.74 1.38 0.19 0.38 0.14 0.16 0.15 0.2 3.71 0.25 0.33 0.41 0.39 0.13 0.17 2.19 0.18 0.20 0.3 0.74 0.06 0.34 0.27 0.45 0.68 0.29

1992 0.23 0.05 0.1 0.45 0.11 0.47 0.17 0.38 0.07 0.15 0.02 0.93 0.50 0.46 0.49 1.40 0.28 0.08 0.57 0.08 0.13 0.23 0.70 0.24 0.52 0.86 1.29 0.15 0.32 0.13 0.15 0.15 0.19 3.82 0.26 0.36 0.38 0.39 0.13 0.17 2.22 0.17 0.21 0.33 0.70 0.06 0.30 0.33 0.46 1.04 0.28

2002 0.22 0.26 0.08 0.45 0.10 0.40 0.17 0.41 0.07 0.14 0.02 0.78 0.48 0.45 0.51 1.29 0.29 0.08 0.56 0.05 0.12 0.22 0.62 0.27 0.50 0.80 1.25 0.09 0.31 0.11 0.41 0.15 0.11 3.83 0.26 0.34 0.35 0.37 0.11 0.15 2.16 0.15 0.17 0.25 0.72 0.07 0.25 0.32 0.48 1.31 0.26

Panel C: Sub-county general purpose local governments per 1,000 square miles State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 5.96 0.05 0.43 6.92 1.97 2.33 38.19 25.08 5.46 8.07 0.16 2.34 46.60 43.19 16.72 25.90 7.88 4.94 8.53 14.94 44.78 30.87 33.17 5.61 16.12 0.84 13.14 0.14 26.10 76.45 0.60 32.66 8.24 25.25 54.76 7.27 2.17 56.99 37.33 7.94 18.41 5.85 2.82 2.55 33.41 5.64 4.66 8.98 33.42 0.89 9.54

1962 6.88 0.07 0.54 8.01 2.40 2.44 38.4 26.11 6.79 9.53 0.16 2.42 48.29 43.36 16.90 26.45 9.19 5.93 8.62 15.56 44.78 31.13 33.51 5.68 17.73 0.86 13.21 0.16 26.10 76.45 0.66 32.71 9.22 25.28 55.20 7.77 2.32 57.08 37.33 8.47 18.18 6.8 3.31 2.59 33.09 5.97 4.95 9.31 33.77 0.93 9.87

1972 7.81 0.20 0.58 8.72 2.61 2.49 37.78 26.62 7.24 9.00 0.16 2.39 48.56 43.33 17.03 26.2 9.52 6.59 8.75 15.45 44.78 31.34 33.32 5.76 17.96 0.87 13.18 0.16 26.43 76.45 0.74 32.81 9.33 25.03 55.10 7.97 2.41 57.22 37.33 8.71 17.69 7.67 3.75 2.61 32.22 5.84 4.59 9.39 33.85 0.90 9.98

65

1982 8.56 0.25 0.67 9.07 2.75 2.58 37.57 28.66 7.26 9.05 0.16 2.40 48.83 43.83 17.10 24.38 10.68 6.91 9.47 15.56 44.78 31.29 33.29 6.23 18.17 0.87 13.08 0.16 26.10 76.59 0.80 32.69 9.94 25.01 55.17 8.47 2.52 57.30 37.33 8.81 17.24 8.13 4.29 2.73 31.79 5.79 3.99 9.60 34.05 0.94 10.07

1992 8.64 0.26 0.76 9.40 2.95 2.57 36.74 29.18 7.24 9.10 0.16 2.41 48.85 43.89 17.04 24.21 10.95 6.91 15.88 15.86 44.78 31.27 33.38 6.27 18.25 0.88 12.83 0.17 26.10 76.45 0.81 32.79 10.60 24.85 55.10 8.57 2.49 57.35 37.33 8.94 16.86 8.23 4.48 2.78 31.04 5.81 4.03 9.60 34.05 1.00 10.16

2002 8.89 0.27 0.77 9.59 3.05 2.61 36.95 29.18 7.50 9.02 0.16 2.42 48.98 43.92 16.97 23.55 10.68 6.94 15.85 16.07 44.78 31.25 33.25 6.32 18.27 0.89 12.71 0.18 26.10 76.32 0.84 32.73 11.11 24.54 54.95 8.60 2.51 56.81 37.33 8.94 16.45 8.47 4.57 2.88 30.71 5.79 4.20 9.72 34.07 1.01 10.15

Panel D: Sub-county general purpose local governments plus special districts per 1,000 square miles State AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY USA

1952 7.34 0.07 0.73 11.36 10.88 5.19 72.45 45.55 8.94 10.68 1.72 7.11 74.42 51.36 19.77 34.75 11.16 8.25 12.67 31.11 72.84 32.34 34.06 11.03 28.98 1.75 19.45 0.54 34.8 87.37 1.24 53.17 10.17 26.61 58.17 8.64 6.41 57.64 84.22 10.53 19.15 7.91 4.7 3.84 40.98 6.7 14.34 9.93 34.77 1.83 13.03

1962 10.86 0.09 1.00 13.76 14.98 7.90 80.5 58.35 11.69 14.64 2.65 8.09 86.54 58.97 21.61 37.21 13.70 11.46 12.67 33.56 69.52 32.87 34.95 11.35 28.50 2.18 22.99 0.93 35.58 116.22 1.50 53.25 14.27 28.84 59.52 9.57 9.89 88.28 90.91 13.19 19.23 13.30 6.11 4.31 40.87 7.13 17.98 11.59 35.03 2.41 15.08

1972 13.45 0.20 1.37 15.75 16.87 10.32 85.45 66.54 13.08 15.22 2.50 8.95 91.87 66.53 22.49 40.08 20.75 16.21 12.84 38.88 78.96 33.79 35.97 11.77 29.87 2.64 27.25 1.38 36.91 122.43 1.55 53.02 20.84 33.16 61.81 13.83 11.02 96.87 107.18 14.75 19.48 18.76 8.39 4.75 40.23 7.30 19.93 16.54 36.08 2.99 16.81

66

1982 16.24 0.26 1.82 18.77 18.82 12.51 95.57 99.8 14.99 15.67 2.34 10.36 95.65 68.84 23.56 41.12 23.69 7.81 15.78 42.57 89.93 34.53 37.76 12.95 35.51 3.96 28.13 1.38 38.70 137.80 1.63 52.24 24.15 35.05 64.38 14.38 11.11 103.05 113.88 16.84 19.86 19.51 10.71 5.30 40.77 7.88 20.97 21.73 38.89 3.26 18.11

1992 18.23 0.29 3.06 20.17 20.89 14.64 112.7 129.48 15.8 16.25 2.65 11.21 101.38 70.07 23.99 42.32 25.81 7.60 22.33 38.68 95.29 36.15 38.12 13.09 38.37 4.70 26.45 1.59 39.03 126.88 1.77 53.55 25.42 35.32 67.63 16.20 11.19 102.11 116.75 18.60 20.31 19.80 13.13 6.79 42.28 9.07 21.42 24.14 40.99 4.85 19.19

2002 19.24 0.29 3.45 23.11 21.20 16.24 116.21 162.24 19.10 18.88 2.50 12.07 105.56 75.28 26.67 42.28 28.80 7.97 23.04 24.76 96.18 37.70 38.32 16.08 40.25 4.96 27.62 1.62 42.60 113.53 6.01 56.77 17.66 35.61 70.36 16.75 12.16 98.87 109.10 18.94 21.41 20.00 13.15 6.53 47.15 10.74 21.83 23.93 46.66 6.64 20.06

Table 13: Number and density of municipalities within the 20 largest Canadian metropolitan areas, 1960-2000 Panel A: Number of municipalities, by metropolitan area Metro area Toronto, ON Montreal, QC Vancouver, BC Ottawa-Hull, ON/QC Calgary, AB Edmonton, AB Quebec City, QC Winnipeg, MB Hamilton, ON London, ON Kitchener, ON St. Catherines, ON Halifax, NS Victoria, BC Windsor, ON Oshawa, ON Saskatoon, SK Regina, SK St. John's, NF Greater Sudbury, ON

1960 28 84 17 13 6 7 33 16 12 3 9 3 8 8 8 4 1 1 10 10

1970 29 104 24 25 1 10 37 14 12 9 9 8 8 9 12 3 1 2 14 12

67

1980 20 100 35 18 1 11 41 6 8 8 5 8 10 16 10 2 1 1 20 6

1990 28 104 39 23 9 35 46 8 8 12 5 10 10 21 11 3 21 17 19 7

2000 24 109 39 13 9 35 45 11 3 7 5 10 4 23 5 3 24 17 13 3

Panel B: Number of municipalities per 100,000 people, by metropolitan area Metro area Toronto, ON Montreal, QC Vancouver, BC Ottawa-Hull, ON/QC Calgary, AB Edmonton, AB Quebec City, QC Winnipeg, MB Hamilton, ON London, ON Kitchener, ON St. Catherines, ON Halifax, NS Victoria, BC Windsor, ON Oshawa, ON Saskatoon, SK Regina, SK St. John's, NF Greater Sudbury, ON

1960 1.53 3.98 2.15 3.03 2.15 2.07 9.23 3.36 3.04 1.65 5.81 2 4.34 5.19 4.14 4.94 1.05 0.89 11 9

1970 1.1 3.8 2.22 4.15 0.25 2.01 7.7 2.6 2.41 3.15 3.97 2.64 3.59 4.6 4.64 2.49 0.79 1.42 10.62 7.72

68

1980 0.67 3.54 2.76 2.41 0.17 1.67 7.12 1.02 1.48 2.82 1.74 2.63 3.6 6.85 4.06 1.3 0.65 0.61 12.92 4

1990 0.72 3.33 2.44 2.5 1.19 4.17 7.12 1.23 1.33 3.15 1.4 2.74 3.12 7.29 4.2 1.25 10 8.87 11.06 4.44

2000 0.51 3.16 1.96 1.21 0.95 3.73 6.55 1.62 0.45 1.61 1.21 2.65 1.11 7.37 1.52 1.01 10.62 8.92 7.52 1.93

Table 14: Number of local government units within the largest 50 metropolitan areas in the United States, 1997

New York Los Angeles--Long Beach Chicago Philadelphia Washington Detroit Houston Atlanta Boston Dallas Riverside--San Bernardino Phoenix--Mesa Minneapolis--St. Paul San Diego Orange County Nassau--Suffolk St. Louis Baltimore Pittsburgh Oakland Seattle--Bellevue--Everett Tampa--St. Petersburg--Clearwater Cleveland--Lorain--Elyria Miami Newark Denver Portland--Vancouver Kansas City San Francisco San Jose Cincinnati Fort Worth--Arlington Sacramento Norfolk--Virginia Beach--Newport San Antonio Indianapolis Fort Lauderdale Orlando Columbus Milwaukee--Waukesha Charlotte--Gastonia--Rock Hill Bergen--Passaic Las Vegas New Orleans Salt Lake City--Ogden Greensboro--Winston-Salem--Hi Nashville Buffalo--Niagara Falls Hartford Providence--Fall River--Warwick

General purpose (GP) local gov’ts 80 88 455 354 96 212 79 107 380 145 48 32 331 18 31 110 300 20 412 32 56 35 200 27 129 31 56 171 32 15 198 60 13 11 33 184 28 36 178 90 52 86 10 17 41 43 43 63 58 33

69

Special districts (SD)

GP per 100,000 population 65 196 662 296 49 44 669 109 409 98 223 105 97 113 86 199 357 55 334 142 191 51 55 6 35 378 163 231 111 42 101 27 221 15 32 220 35 33 48 48 25 7 47 5 91 27 58 37 110 69

0.93 0.96 5.73 7.16 2.06 4.75 2.02 2.86 11.57 4.53 1.55 1.10 11.70 0.66 1.14 4.12 11.72 0.81 17.57 1.39 2.43 1.56 9.00 1.26 6.63 1.61 3.08 9.85 1.91 0.92 12.25 3.77 0.84 0.71 2.15 12.12 1.86 2.40 12.09 6.17 3.77 6.44 0.76 1.31 3.25 3.69 3.73 5.48 5.08 2.95

GP plus SD per 100,000 population 1.68 3.08 14.06 13.15 3.12 5.73 19.05 5.77 24.02 7.59 8.70 4.68 15.13 4.74 4.30 11.57 25.65 3.03 31.82 7.52 10.69 3.82 11.47 1.54 8.42 21.12 12.04 23.15 8.5 3.48 18.49 5.47 15.06 1.68 4.23 26.6 4.18 4.60 15.35 9.46 5.57 6.96 4.32 1.69 10.45 6.00 8.74 8.69 14.70 9.10

Table 15: Determinants of the log number of general-purpose local government units within Canadian provinces and US states, 1960-2000

Constant Log(population) Log(land area) Latitude Longitude Major port Canada indicator

(1a) 1960 -7.29*** (2.11) 0.81*** (0.15) 0.26* (0.14) 0.06*** (0.02) -0.04*** (0.01) -0.89*** (0.29) -0.75 (0.46)

(1b) 1960 -7.24*** (2.26) 0.79*** (0.14) 0.23 (0.15) 0.07*** (0.02) -0.04*** (0.01) -0.93** (0.50) -0.75 (0.50) 0.00 (0.00) 0.27 (0.27)

(2a) 1970 -6.77*** (1.88) 0.68*** (0.13) 0.37*** (0.12) 0.07*** (0.02) -0.04*** (0.01) -0.69*** (0.23) -0.88** (0.40)

(2b) 1970 -6.57*** (1.91) 0.68*** (0.15) 0.32** (0.14) 0.08*** (0.02) -0.04*** (0.01) -0.73*** (0.23) -0.91** (0.42) -0.00 (0.00) 0.29 (0.26)

(3a) 1980 -6.35*** (1.94) 0.63*** (0.15) 0.40*** (0.12) 0.07*** (0.02) -0.04*** (0.01) -0.62*** (0.23) -0.91** (0.41)

(3b) 1980 -6.21*** (0.19) 0.62*** (0.16) 0.34** (0.15) 0.08*** (0.02) -0.04*** (0.01) -0.66*** (0.22) -0.92** (0.43) 0.00 (0.00) 0.34 (0.27)

(4a) 1990 -5.47*** (1.95) 0.55*** (0.14) 0.45*** (0.12) 0.07*** (0.02) -0.04*** (0.01) -0.52** (0.23) -1.06** (0.42)

(4b) 1990 -5.47*** (1.98) 0.51*** (0.15) 0.41*** (0.15) 0.08*** (0.02) -0.04*** (0.01) -0.56** (0.22) -1.03** (0.44) 0.00 (0.00) 0.36 (0.27)

(5a) 2000 -6.25*** (1.97) 0.53*** (0.13) 0.45*** (0.12) 0.09*** (0.01) -0.04*** (0.01) -0.41* (0.21) -1.15*** (0.41)

(5b) 2000 -5.93*** (2.06) 0.49*** (0.16) 0.42*** (0.15) 0.08*** (0.02) -0.04*** (0.01) -0.57** (0.23) -0.92* (0.49) 0.00 (0.00) 0.39 (0.28)

0.72 59

0.72 59

0.70 60

0.72 60

0.70 60

0.71 60

0.68 60

0.69 60

0.66 60

0.68 60

Years of settlement Civil law indicator R-squared N

Notes: See text.

70

Table 16: Determinants of the number of general-purpose local governments in Canadian and US metro areas for 1997/2000 Panel A: Dependent variable is the log of the number of local government units (1) Baseline regression Log(population) Log(land area) Latitude Longitude River Port Canada

(2) Include climate controls 0.52*** (0.04) 0.19*** (0.04) 0.10*** (0.03) -0.02*** (0.00) 0.22** (0.09) -0.11 (0.11) -1.46*** (0.18) 0.01 (0.03) 0.00** (0.00)

0.52*** (0.04) 0.19*** (0.04) 0.09*** (0.01) -0.02*** (0.00) 0.21** (0.09) -0.10 (0.12) -1.43*** (0.16)

Temperature Precipitation National capital indicator Prov/state capital indicator Civil law indicator R-squared N

0.68 452

0.68 452

71

(3) Include climate and political controls 0.54*** (0.04) 0.18*** (0.04) 0.11*** (0.03) -0.02*** (0.01) 0.22** (0.09) -0.13 (0.12) -1.48*** (0.19) 0.01 (0.03) 0.00 (0.00) -0.78*** (0.23) -0.06 (0.13) 0.17** (0.08) 0.69 452

Panel B: Dependent variable is the number of local government units per 100,000 persons (1) Baseline regression Log(land area) Latitude Longitude River Port Canada

1.73** (0.66) 1.14*** (0.17) -0.12*** (0.04) 0.76 (1.48) -5.597*** (1.23) -6.91*** (2.82)

Temperature Precipitation

(2) Include climate controls 1.80*** (0.65) 0.80** (0.33) -0.08* (0.04) 0.86 (1.48) -5.59*** (1.26) -8.44*** (3.19) -0.44 (0.36) 0.00 (0.00)

(3) Include climate and political controls 2.08*** (0.67) 0.83** (0.37) -0.09* (0.05) 1.02 (1.45) -5.62*** (1.29) -8.32*** (3.22) -0.44 (0.38) 0.00 (0.00) -15.66*** (2.05) -5.51*** (1.43) 0.35 (1.06)

0.22 452

0.25 452

National capital indicator Prov/state capital indicator Civil law indicator R-squared N

0.22 452

Notes: For Canada, the data on local governments and population are from 2000. For the US the data are from 1997. Local government units only include sub-county general purpose governments (cities, towns, townships, boroughs).

72

Table 17: Effect of home rule status in 1950 and 1970 on the number of sub-county general-purpose government units in US states, 1960-2000

Log(population) Log(land area) Latitude Longitude Major port Years since statehood Civil law indicator HR in 1950

1960 0.71*** (0.16) 0.45*** (0.12) 0.06 (0.03) -0.05*** (0.01) -0.62*** (0.27) -0.00 (0.01) 0.04 (0.31) 0.40 (0.27)

1970 0.65*** (0.17) 0.41*** (0.12) 0.07*** (0.02) -0.05*** (0.01) -0.52** (0.25) -0.00 (0.01) 0.13 (0.30) 0.39 (0.26)

1980a 0.58*** (0.18) 0.53*** (0.13) 0.07*** (0.02) -0.05*** (0.01) -0.44* (0.25) -0.00 (0.01) 0.17 (0.30) 0.46* (0.26)

HR in 1970 R-squared N

0.77 50

0.75 50

0.76 50

1980b 0.56*** (0.18) 0.51*** (0.13) 0.07*** (0.02) -0.05*** (0.01) -0.49* (0.24) 0.00 (0.01) 0.26 (0.27)

0.45* (0.25) 0.77 50

1990a 0.45*** (0.17) 0.60*** (0.13) 0.07*** (0.02) -0.06*** (0.01) -0.30 (0.24) -0.00 (0.01) 0.18 (0.31) 0.52** (0.26)

0.76 50

1990b 0.44** (0.17) 0.59*** (0.12) 0.07*** (0.02) -0.05*** (0.01) -0.35 (0.24) -0.00 (0.01) 0.28 (0.28)

0.48* (0.25) 0.76 50

2000a 0.45*** (0.15) 0.61*** (0.12) 0.08*** (0.02) -0.06*** (0.01) -0.22 (0.25) -0.00 (0.01) 0.23 (0.30) 0.49* (0.25)

0.75 50

2000b 0.45*** (0.15) 0.58*** (0.12) 0.08*** (0.02) -0.05*** (0.01) -0.29 (0.25) -0.00 (0.01) 0.32 (0.28)

0.49* (0.24) 0.74 50

Note: 1. The dependent variable is the log of the number of sub-county general-purpose government units within a state. Sub-county general-purpose government units include cities, towns, townships and boroughs. 2. A state is classified as HR in 1950/70 if it has structural and functional home rule by 1950/70. Home rule status is taken from Table A1 of Home Rule in America.

Table 18: Effect of home rule status on the log number of sub-county general-purpose government units in US metro areas, 1997. Panel A: Dependent variable is the log of local government units

Log(population) Log(land area) Latitude Longitude River Port

(1a) Baseline

(1b) Baseline

0.60*** (0.07) 0.18* (0.10) 0.08*** (0.01) -0.03*** (0.01) 0.23** (0.11) -0.15 (0.11)

0.61*** (0.06) 0.17* (0.09) 0.09*** (0.01) -0.03*** (0.01) 0.23** (0.11) -0.18 (0.12)

Temperature Precipitation Home rule status in 1950 Home rule status in 1970 National capital indicator State capital indicator

0.33*** (0.09)

(2b) Include climate controls 0.62*** (0.07) 0.16* (0.09) 0.02 (0.03) -0.03*** (0.01) 0.22* (0.12) -0.11 (0.10) -0.07* (0.04) -0.00 (0.00) 0.29*** (0.09)

0.21** (0.09)

(2b) Include climate controls 0.64*** (0.06) 0.15* (0.09) 0.02 (0.03) -0.03*** (0.01) 0.22* (0.11) -0.13 (0.11) -0.08** (0.04) -0.00 (0.00)

0.18** (0.09)

Civil law indicator R-squared N

0.61 314

0.60 314

(3a) Include climate and political controls 0.65*** (0.07) 0.15* (0.09) 0.03 (0.04) -0.03*** (0.01) 0.21* (0.11) -0.14 (0.10) -0.08** (0.04) -0.00 (0.00) 0.22** (0.01)

0.62 314

74

0.62 314

(3b) Include climate and political controls 0.67*** (0.07) 0.14 (0.09) 0.03 (0.04) -0.03*** (0.01) 0.21* (0.11) -0.16 (0.11) -0.09** (0.03) -0.00 (0.00)

-0.63** (0.18) -0.12 (0.14)

0.12 (0.09) -0.66*** (0.19) -0.15 (0.14)

0.29*** (0.11) 0.63 316

0.33 (0.14) 0.63 314

Panel B: Dependent variable is the number of local government units per 100,000 persons

Log(land area) Latitude Longitude River Port

(1a) Baseline

(1b) Baseline

0.47 (0.97) 1.00*** (0.18) -0.19*** (0.06) 0.89 (1.65) -5.08*** (1.42)

0.54 (0.99) 1.03*** (0.19) -0.19*** (0.06) 0.95 (1.63) -5.21*** (1.45)

Temperature Precipitation Home rule status in 1950

2.41* (1.58)

Home rule status in 1970 National capital indicator State capital indicator Civil law indicator R-squared N

(2a) Include climate controls 0.49 (0.91) -0.10 (0.31) -0.14*** (0.05) 0.86 (1.63) -3.81*** (1.63) -1.34*** (0.37) -0.00* (0.00) 1.91 (1.26)

2.28* (1.38)

0.26 314

0.26 314

(2b) Include climate controls 0.56 (0.93) -0.10 (0.32) -0.14*** (0.05) 0.92 (1.62) -3.90*** (1.37) -1.37*** (0.38) -0.00* (0.00)

(3a) Include climate and political controls 0.71 (0.97) -0.03 (0.37) -0.16*** (0.07) 0.95 (1.59) -4.05*** (1.46) -1.42*** (0.38) -0.00* (0.00) 1.12 (1.28)

1.94 (1.32)

0.26 314

75

0.29 314

-11.10*** (1.28) -4.80*** (2.65) 2.32 (1.52) 0.32 314

(3b) Include climate and political controls 0.76 (1.00) -0.01 (0.38) -0.15** (0.07) 1.00 (1.58) -4.12*** (1.48) -1.43*** (0.38) -0.00* (0.00)

1.33 (1.30) -10.83*** (2.60) -4.79*** (1.37) 2.39 (1.50) 0.32 314