Determinants of Urban Sprawl: A Panel Data Approach

This paper employs panel-data estimation approaches to test hypotheses of the monocentric urban model. We apply both within- and between- groups estimation approaches to urbanized area data for the 1990-2010 period. From a fixed-effects (within-groups) model, we find that a 1-percent increase in population or a 1-percent decrease in travel costs expands the urbanized area by 1.05 percent or 0.52 percent, respectively. The impact of household income on urban spatial size is negative, contrary to the theoretical prediction. Similar findings of the impact of population and travel costs are obtained from the between-groups estimation. While the impact of household income is negative in the fixed effect-model, its impact is ambiguous in the between-groups estimation. The between-groups estimation also indicates that geographic and political factors help explain spatial size differences across urbanized areas. Spatial size is larger with a higher percentage of the urban fringe overlying aquifers, a higher percentage of local revenues from intergovernmental transfers, a lower elevation range in the urban fringe, and a lower number of restaurants and bars per 1000 people.