Stochastic equations and cities

TL;DR

This paper reviews stochastic equations used to model urban population dynamics, explaining empirical laws like Zipf's law and the turbulent rank fluctuations of cities through various theoretical models.

Contribution

It provides a comprehensive review of stochastic models, including Gibrat and Gabaix models, and introduces a new perspective on inter-urban migration shocks affecting city populations.

Findings

Gibrat model explains random growth of city populations.

Gabaix model accounts for stationary distribution with friction.

Migration shocks are crucial for population dynamics.

Abstract

Stochastic equations constitute a major ingredient in many branches of science, from physics to biology and engineering. Not surprisingly, they appear in many quantitative studies of complex systems. In particular, this type of equation is useful for understanding the dynamics of urban population. Empirically, the population of cities follows a seemingly universal law - called Zipf's law - which was discovered about a century ago and states that when sorted in decreasing order, the population of a city varies as the inverse of its rank. Recent data however showed that this law is only approximate and in some cases not even verified. In addition, the ranks of cities follow a turbulent dynamics: some cities rise while other fall and disappear. Both these aspects - Zipf's law (and deviations around it), and the turbulent dynamics of ranks - need to be explained by the same theoretical framework and it is natural to look for the equation that governs the evolution of urban populations. We will review here the main theoretical attempts based on stochastic equations to describe these empirical facts. We start with the simple Gibrat model that introduces random growth rates, and we will then discuss the Gabaix model that adds friction for allowing the existence of a stationary distribution. Concerning the dynamics of ranks, we will discuss a phenomenological stochastic equation that describes rank variations in many systems - including cities - and displays a noise-induced transition. We then illustrate the importance of exchanges between the constituents of the system with the diffusion with noise equation. We will explicit this in the case of cities where a stochastic equation for populations can be derived from first principles and confirms the crucial importance of inter-urban migrations shocks for explaining the statistics and the dynamics of the population of cities.