Are Cities in Advanced Countries Saturated in Population Size?

ABSTRACT Although the focus on urbanization has shifted to developing countries, developed countries still face several challenges. In this regard, the present study proposes to investigate the capacity of cities in developed countries in terms of population size and reflects on the interaction between the city's core and hinterland areas. In addition, the impact of cities on employment, gross domestic product, and productivity, as well as the short‐ and long‐term relationship between them, are examined. We estimate Gini coefficients and apply panel stochastic frontier and panel cointegration approaches using data from 688 cities in 39 advanced countries to test our hypothesis. The estimated results show that the number of million‐plus cities growing in developed nations varies widely, and a city's hinterland and core vary in terms of population concentrations. The population in the core and hinterland areas have achieved saturation point. Therefore, the benefits of agglomeration economies have disappeared from these cities. It thus concurs with the S‐shaped urbanization curve. The population concentration in the hinterland region is negatively impacted by territorial fragmentation and mean population exposure to particulate matter of 2.5 air pollution. There is a need to improve the density and management of environmental degradation through higher investment in making cities more productive and sustainable.