A test of the relationship between the Pareto exponent and sample size

A test of the relationship between the Pareto exponent and sample size

This paper uses un-truncated city population data from three countries—the United States, Spain and Italy—to empirically test Proposition 1 put forth by Eeckhout (2004 American Economic Review, 94: 1429–1451). Eeckhout’s hypothesis was that the estimate of the Pareto exponent in a standard Zipf regr...

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Bibliographic Details
Published in:Investigaciones regionales
Main Authors: González-Val, Rafael, Sanz-Gracia, Fernando
Format: Journal Article
Language:English
Published: 11-11-2024
Online Access:Get full text
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Summary:This paper uses un-truncated city population data from three countries—the United States, Spain and Italy—to empirically test Proposition 1 put forth by Eeckhout (2004 American Economic Review, 94: 1429–1451). Eeckhout’s hypothesis was that the estimate of the Pareto exponent in a standard Zipf regression decreases with sample size, if the underlying city size distribution is lognormal. Using rolling sample regressions, we find that this proposition is only valid once we enter the lognormal body of the distribution; for the Pareto-distributed upper-tail, the estimated exponent does not vary with sample size.
ISSN:1695-7253
2340-2717
DOI:10.38191/iirr-jorr.24.064