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Estimable equilibrium models of locational sorting and their role in development economics

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  • Christopher Timmins
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    Abstract

    Geography plays a prominent role in many problems in development economics--directly in analyses of the spatial distribution of important variables like poverty and productivity, and indirectly through the role of local spillovers in economic growth. Empirical work on these topics is complicated by the fact that the behavioral consequences of such spillovers cannot be distinguished from those of unobservable local attributes using only the observed location decisions of individuals or firms. This problem can be solved with an instrumental variables strategy derived from the internal logic of a structural model of residential sorting. We show practically how the strategy is implemented, provide intuition for the instruments and econometric identification, demonstrate how traditional techniques overstate agglomeration externalities, and use the model to value changes in spillovers from urban centers. Copyright 2005, Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Journal of Economic Geography.

    Volume (Year): 5 (2005)
    Issue (Month): 1 (January)
    Pages: 83-100

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    Handle: RePEc:oup:jecgeo:v:5:y:2005:i:1:p:83-100

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    Cited by:
    1. Ravi Kanbur, 2005. "Spatial Inequality and Development: Overview of UNU-WIDER Project," Working Papers id:215, eSocialSciences.
    2. Sriniketh Nagavarapu, 2008. "Brazilian Ethanol: A Gift or Threat to the Environment and Regional Development?," Discussion Papers 07-039, Stanford Institute for Economic Policy Research.
    3. Koster, Hans R.A. & van Ommeren, Jos & Rietveld, Piet, 2014. "Estimation of semiparametric sorting models: Explaining geographical concentration of business services," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 14-28.
    4. Lall, Somik V. & Timmins, Christopher & Yu, Shouyue, 2009. "Connecting lagging and leading regions : the role of labor mobility," Policy Research Working Paper Series 4843, The World Bank.

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