Working Paper: NBER ID: w9729
Authors: Carolyn L. Evans; James Harrigan
Abstract: Time is money, and distance matters. We model the interaction of these truisms, and show the implications for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model, timely delivery is important because it allows retailers to respond to fluctuating final demand without holding costly inventories, and timely delivery is only possible from nearby locations. Using a unique dataset that allows us to measure the retail demand for timely delivery, we show that the sources of US apparel imports have shifted in the way predicted by the model, with products where timeliness matters increasingly imported from nearby countries.
Keywords: No keywords provided
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| demand for timeliness (C41) | geographical shift in sourcing of apparel imports (L67) |
| geographical shift in sourcing of apparel imports (L67) | higher wages in proximity to final demand (J39) |
| demand for timeliness (C41) | higher wages in proximity to final demand (J39) |
| demand for timeliness (C41) | specialization of production in nearby countries (F12) |
| higher wages in proximity to final demand (J39) | spatial inequality (R12) |