We consider the distribution of economic activity within a country in light of three leading theories -increasing returns, random growth, and locational fundamentals. To do so, we examine the distribution of regional population in Japan from the stone age to the modern era. We also consider the Allied bombing of Japanese cities in WWII as a shock to relative city sizes. Our results support a hybrid theory in which locational fundamentals establish the spatial pattern of relative regional densities, but increasing returns may help to determine the degree of spatial differentiation. One implication of these results is that even large temporary shocks to urban areas have no long-run impact on city size.

A half century of empirical work attempting to predict the factor content of trade in goods has failed to bring theory and data into congruence. Our study shows how the Heckscher-Ohlin-Vanek theory, when modified to permit technical differences, a breakdown in factor price equalization, the existence of nontraded goods, and costs of trade, is consistent with data from ten OECD countries and a rest-of-world aggregate. (JEL F1, F11, D5) A central objective of international economic research has been to account for the factor content of trade. There are two principal reasons. The first is that economists want to trace the effects of international influences on relative and absolute factor prices within a country. The Heckscher-Ohlin model and its variants, with their emphasis on trade arising from differences in the availability of productive factors, provide a natural setting for such investigations.

We consider the distribution of economic activity within a country in light of three leading theories -increasing returns, random growth, and locational fundamentals. To do so, we examine the distribution of regional population in Japan from the stone age to the modern era. We also consider the Allied bombing of Japanese cities in WWII as a shock to relative city sizes. Our results support a hybrid theory in which locational fundamentals establish the spatial pattern of relative regional densities, but increasing returns may help to determine the degree of spatial differentiation. One implication of these results is that even large temporary shocks to urban areas have no long-run impact on city size.

Bank for many useful suggestions. Jennifer Peck and Adam Sacarny provided excellent research assistance. The views expressed in this working paper are those of the authors and do not necessarily represent those of the Federal Reserve Bank of New York. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.