Why the city centre re-emerged from destruction.

Wars, natural disasters, pandemics and big technological changes all affect the structure of cities, including the geographical distribution of economic activities across urban areas. In particular, a city's structure would change substantially if a central location with the highest population and employment were to be destroyed by a large shock such as a bombing. Whether city structures are resilient to such shocks and what mechanisms might underpin resilience are an emerging focus of economic analysis (Glaeser, 2022).

Although there is an influential line of economic research on wartime bombing (for example, Davis and Weinstein, 2002), two challenges remain in understanding the mechanisms that might support urban resilience. First, we rarely observe a large shock to city structure while having access to spatially granular data on economic activities over long periods. Second, we need a quantifiable model of the dynamics of internal city structure.

We present new evidence on the resilience of city structures by analysing the atomic bombing of Hiroshima, one of the most remarkable examples of urban recovery in human history. We begin by assembling a new dataset on the city's economic activity at a fine level of spatial disaggregation, covering both before and after the Second World War. Figure 1 shows the variation of the destruction across blocks.

Figure 1: Destruction of the atomic bombing in Hiroshima

In the pre-war period, Hiroshima had a monocentric city structure, with the highest employment and population densities concentrated in the centre

In the pre-war period, Hiroshima had a monocentric city structure, with the highest employment and population densities concentrated in the centre. In the immediate aftermath of the bombing, there was a complete reversal of this structure, with the centre devastated and the highest population densities found in the outskirts. Nevertheless, by as early as 1950, a monocentric structure had re-emerged, with the highest concentrations of employment and population densities in the centre. Figure 2 illustrates this pattern.

What mechanisms could explain the recovery? First, there could be some locational advantages in the destroyed city centre that persisted after the bombing. Second, people may have expected the recovery of the centre, and the incentive to live and work there arose once more from agglomeration forces due to the expected high density, as in the pre-war period.

Figure 2: Population density by distance to the city centre in Hiroshima

The centre of Hiroshima was completely destroyed - its recovery within five years is a remarkable example of urban resilience

Creating a dynamic model

Guided by the reduced-form results, we develop a new dynamic quantitative model of internal city structure to understand the mechanisms of recovery. The model incorporates commuting, forward-looking location choices of workers, durable floor space, migration frictions, agglomeration forces, and heterogeneous location fundamentals.

In our model the city consists of a discrete number of locations that correspond to city blocks in the data. Blocks differ in terms of their productivity, amenities, bilateral commuting costs and land endowment, where:

• Productivity depends on both location fundamentals (e.g. access to natural water) and agglomeration forces, as determined by the surrounding concentration of employment.
• Amenities depend on both location fundamentals (e.g. scenic views) and agglomeration forces, as determined by the surrounding concentration of residents.
• Bilateral commuting costs depend on the observed transport network, including both private and public transportation.
• The land endowment of each block is constant over time.

There is a single final good that is produced using labour and floor spaces under conditions of perfect competition. There are competitive developers who supply floor spaces in each block, which defines the dynamics of floor spaces. Workers are endowed with one unit of labour that is supplied inelastically. They commute from their residence to their workplace subject to commuting costs, as in Ahlfeldt et al. (2015) and Monte et al. (2018).

In each period, an individual may receive an opportunity to change their residence and workplace. Given an opportunity to change locations, individuals choose their locations in a forward-looking way, taking into account the expected future values of living and working in particular locations. This introduces dynamics and gradual adjustment in worker mobility decisions, as in Caliendo et al (2019), within a city.

The model is quantified using the observed data on population, employment, floor spaces, and bilateral travel times in Hiroshima. The worker commuting and mobility parameters are calibrated using the historical data for Hiroshima. Given these commuting parameters, the model can be inverted to recover unobserved productivities and amenities in each location, which in turn depend on agglomeration forces and location fundamentals.

One of our key quantitative findings is that strong agglomeration forces are required to explain the re-emergence of the city centre in the aftermath of the atomic bombing. When there is no agglomeration force, the model no longer predicts the recovery of the population and employment in central Hiroshima (Figure 3a). Given the strong agglomeration forces, there exists another possible rational expectations equilibrium, in which economic activity could have remained concentrated in the outskirts of the city (the counterfactual central business district), instead of coalescing around the pre-war centre, as illustrated in Figure 3b. This provides empirical underpinnings to the discussion of "history" versus "expectation" - the initial conditions determined by history can be overcome by expectations when agglomeration forces are important - which traces back to Krugman (1991).

Figure 3a: Population density with no agglomeration forces

Figure 3b: Population density with no expectations for recovery

The re-emergence of Hiroshima's pre-war urban structure was driven by residents' expectations that the focal point of the city centre would recover

People's expectations of places matter

So what advantages of the city centre survived the bombing? Central Hiroshima was substantially damaged by the bombing, including areas around Hacchobori and Kamiya-cho, located next to Hiroshima castle, a historical amenity that had been a symbol of the city since the samurai period in the late 16th century. The centre was also adjacent to the former centre, called Nakajima-cho, which developed during the samurai period due to its convenient access to the castle and water transport. These advantages were lost following the bombing. Hiroshima castle was completely destroyed as was Nakajima-cho. Although the centre may have retained some transport advantage, jobs and other economic amenities would have been eliminated as central neighbourhoods were completely destroyed and other areas of the city were likely to enjoy better conditions after the bombing. The experience of cities such as Yokohama and Kobe, where the city centre shifted after the war, suggests that the same could have happened in Hiroshima - instead the centre was rebuilt in the same place.

We argue that in the case of Hiroshima, certain factors - such as government recovery plans, the anchoring effect of salient location characteristics in the city centre (for example, tram networks and the destroyed castle), property rights and popular narratives of rebuilding, may have induced expectations that the destroyed centre would return to its high density as in the pre-war period. Our results suggest the importance of these factors in the rapid recovery of the city structure by fostering the formation of such recovery expectations.

Our findings provide empirical support for the idea that the re-emergence of the prewar city structure is driven by a coordination of expectations around this focal point. A key implication is that the resilience of cities in the face of large-scale shocks depends critically on the expectations of people. Therefore, coordinating peoples' expectations about the city structure with public policymakers would aid the reconstruction of war-torn cities, improve urban revitalisation efforts and inform planning for future shocks.

The incentive to live and work in the centre arose from agglomeration forces due to the expected high density

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21 October 2025     Paper Number CEPCP717

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This CentrePiece article is published under the centre's Urban programme.

This publication comes under the following theme: What determines urban growth and urban decline and what should be the role of policy?