Top lights: Bright cities and their contribution to economic development

Abstract

Tracking the development of cities in emerging economies is difficult with conventional data. This paper shows that nighttime lights can be used as a reliable proxy for economic activity at the city level, provided they are first corrected for top-coding. The commonly-used satellite images of nighttime light intensity fail to capture the true brightness of larger cities. We present a stylized model of urban luminosity and empirical evidence which both suggest that these ‘top lights’ can be characterized by a Pareto distribution or similarly heavy-tailed distributions. We then propose a correction procedure that recovers the full distribution of city lights. Our results show that the brightest cities account for nearly a third of global light output. Applying this approach to cities in Sub-Saharan Africa, we find that primate cities are outgrowing secondary cities. Contrary to the top-coded data, our data show that differences at the intensive margin drive the differential in relative growth rates across city types.