The aim of this bachelor thesis is to find out what drives city growth in
Germany. It shall find out what are the determinants that make large cities gain or lose
inhabitants.
Especially in Eastern Germany after the reunification there have been some
“winner cities” such as Dresden, Leipzig, and Potsdam, and many “loser cities” such as
Chemnitz, Magdeburg, and Schwerin. In the last decades, a similar separation between
winners and losers has arisen also in Western Germany. So what is the reason for this
division into two groups of cities?
The research is very relevant for city governments and real estate owners or
investors. Emigration of the working populace and few births lower the tax earnings and
raise the necessary public expenses a city has to bear, while the opposite makes a city
thrive fiscally, financially, and economically. Rents and land prices depend on the
development of the city size: shrinking cities have horrendous vacancy rates, while
prices are exploding in growing cities. Knowing what the reasons for city growth shrinkage are enables city governors to adapt the right policies to make their city
become an exception of the overall demographic collapse in Germany or to turn around
a dangerous progress. Knowing these reasons also enables real estate investors to
predict future demand for residential, office, and retail space, and to decide whether
properties are under or overpriced.
Table of Contents
1. Introduction
2. Theories of City Growth and City Size Distributions
2.1 Literature Review
2.2 Which Theory fits Germany?
3. Determinants of City Growth
3.1 Basic Determinants
3.2 Demographic Factors
3.3 Social Factors
3.4 Geographic Factors
3.5 Infrastructural Factors
3.6 Institutional Factors
3.7 Economic Factors
3.8 External Factors
3.9 Basic Factors
4. Uniting the Findings into an Overarching Model
5. Testing the Model
5.1 Included Data
5.2 Tested Variables
5.3 Excluding Outliers from the Model
5.4 Results for the First Regressions
5.5 Multiple Regressions
5.5.1 Model 1
5.5.2 Model 2
5.6 Optimizing the Model
5.6.1 Model 3
5.6.2 Model 4
5.7 Further Modifications
6. Interpretation of the Results
6.1 First Main Finding
6.2 Second Main Finding
6.3 Third Main Finding
6.4 Fourth Main Finding
7. Ideas for Further Research
8. Conclusion
Research Objectives and Key Topics
The primary aim of this bachelor thesis is to identify the drivers of city growth in Germany and to determine the key factors that cause large cities to gain or lose inhabitants. The research addresses the separation between "winner" and "loser" cities and provides insights for city governments and real estate investors regarding demographic trends and economic performance.
- The influence of demographic, social, and economic determinants on net migration.
- Statistical analysis of German large cities using data from 1991, 2001, and 2011.
- Development of an overarching model for city growth based on literature review findings.
- Evaluation of existing city growth theories and their applicability to the German context.
- Analysis of housing prices, urban rent, and their correlation with city size and economic factors.
Excerpt from the Book
2. Theories of City Growth and City Size Distributions
There are different theories on how cities grow differently and why there are characteristic distributions of city sizes among many countries. I have condensed these theories to three schools of thought. They differ in what they regard as the underlying reason for city growth, what they view as the fundamental reason for differences in growth, if they accept the idea of an optimal city size, and what they think is how city sizes react to external shocks, and how city sizes must be distributed. Bosker, Brakman, Garretsen, and Schramm (2006) and Redding and Sturm (2005), among others, give good overviews of competing city growth theories.
The first school of thought is what I would like to call the „returns to scale theory“. It says that the determinants of city growth are endogenous. For example, productivity could depend on population level, and a high productivity in turn could spur population growth, so that there are increasing returns to scale. This school of thought foremost views differences in economic potential as the reason for different population growth among cities. For the „New Economic Geography“, founded by Krugman (1991), market access (i.e. access to consumers and suppliers) is the main factor, as it leads to economic growth and thus population growth (and this in turn enlarges the market access). Connected with this school of thought is the belief that optimal city sizes exist (i.e. a population level where the marginal disadvantages of the city size become so big that they equal the marginal advantages), and that there are multiple equilibria.
Summary of Chapters
1. Introduction: Presents the phenomenon of shrinking and growing cities, such as the contrast between Detroit and Duisburg, and outlines the thesis's purpose to find drivers for city growth in Germany.
2. Theories of City Growth and City Size Distributions: Categorizes growth theories into three schools of thought—returns to scale, random growth, and locational fundamentals—and evaluates which fits Germany best.
3. Determinants of City Growth: Lists and explains identified determinants from literature, including basic, demographic, social, geographic, infrastructural, institutional, and economic factors.
4. Uniting the Findings into an Overarching Model: Synthesizes the literature review findings into a comprehensive conceptual model showing interdependencies between variables and city growth.
5. Testing the Model: Describes the statistical analysis of data from German cities, including data cleaning, identification of outliers, and the results of various regression models.
6. Interpretation of the Results: Discusses the statistical outcomes, highlighting key findings regarding the roles of employment, universities, and initial city size in city growth.
7. Ideas for Further Research: Reflects on the limitations of analytical modelling in human-driven systems and suggests future directions, such as incorporating qualitative factors like city perception.
8. Conclusion: Summarizes the study’s findings, confirming that while some variables are correlated with growth, the complex and interdependent nature of these factors makes deterministic modeling challenging.
Keywords
City Growth, Germany, Net Migration, Urban Development, City Size, Employment, Human Capital, Market Access, Returns to Scale, Agglomeration Economies, Urban Rent, Demographic Change, Locational Fundamentals, Regression Analysis.
Frequently Asked Questions
What is the core focus of this bachelor thesis?
The thesis explores the determinants of city growth in Germany, specifically investigating why some cities gain inhabitants while others lose them, and identifying which factors are the most robust predictors of this growth.
What are the primary thematic areas covered?
The work covers demographic, social, economic, geographic, and infrastructural factors, along with an evaluation of established growth theories and the statistical relationships between these variables.
What is the main objective or research question?
The primary research objective is to discover what drives city growth in Germany and to determine the factors that lead to the divergence between "winner" and "loser" cities.
Which scientific methods are applied in this research?
The author uses a literature review to develop a theoretical model, followed by a quantitative statistical analysis (simple and multiple regressions) of data from German cities for the years 1991, 2001, and 2011.
What does the main part of the thesis address?
The main part investigates various determinants such as economic attractiveness, education levels, infrastructure, and institutional quality, and tests their statistical significance regarding population growth.
Which keywords best characterize the study?
Key terms include City Growth, Migration, Urban Development, Returns to Scale, Agglomeration Economies, and Human Capital.
How does this thesis handle the outlier problem, particularly regarding Berlin?
The thesis identifies Berlin as a significant outlier due to its unique size and historical administrative status, and consequently excludes it from several regression analyses to prevent skewed results.
What role do universities play in the findings of the analysis?
Universities are identified as robust, positive determinants of city growth, often serving as a special application of employment opportunities for students.
- Quote paper
- Florentin Rack (Author), 2014, Why are some Cities Winners or Losers?, Munich, GRIN Verlag, https://www.grin.com/document/286504
