Search for Multiple Equilibria in Urban Industrial Structure

Theories of multiple equilibria (ME) are now widespread across many fields of economics. Yet little empirical work has asked if such multiple equilibria are salient features of real economies. We examine this in the context of the Allied bombing of Japanese cities and industries in WWII in data for 114 Japanese cities in eight manufacturing industries. The data reject the existence of multiple equilibria. In the aftermath even of gargantuan shocks, a city recovers not only its population and its share of aggregate manufacturing, but even the specific industries it had before.