Working Paper: NBER ID: w30598
Authors: Treb Allen; Costas Arkolakis
Abstract: What do recent advances in economic geography teach us about the spatial distribution of economic activity? We show that the equilibrium distribution of economic activity can be determined simply by the intersection of labor supply and demand curves. We discuss how to estimate these curves and highlight the importance of global geography – i.e. the connections between locations through the trading network – in determining how various policy relevant changes to geography shape the spatial economy.
Keywords: economic geography; spatial distribution; labor supply; labor demand; global geography
JEL Codes: F10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor supply and demand curves (J20) | Equilibrium distribution of economic activity (D39) |
| Improvements in amenities (R53) | Labor supply curve (J20) |
| Labor supply curve (J20) | Population levels (J11) |
| Labor supply curve (J20) | Wage levels (J31) |
| Local geography (R12) | Labor supply and demand curves (J20) |
| Local changes in productivity (O49) | Neighboring regions (R11) |
| Infrastructure investment in one location (R53) | Nearby locations (Y91) |
| Market access (L17) | Local economic conditions (R11) |