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

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  • Christopher Timmins

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.

Suggested Citation

  • Christopher Timmins, 2005. "Estimable equilibrium models of locational sorting and their role in development economics," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 83-100, January.
    • Handle: RePEc:oup:jecgeo:v:5:y:2005:i:1:p:83-100
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    File URL: http://hdl.handle.net/10.1093/jnlecg/lbh055
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    Citations

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    Cited by:

    1. Xu, Shang & Klaiber, Allen & Miteva, Daniela, 2018. "The Impact of Concessions on Household Location Choice and Well-Being in Indonesia," 2018 Annual Meeting, August 5-7, Washington, D.C. 274009, Agricultural and Applied Economics Association.
    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. Mark van Duijn & Jan Rouwendal, 2013. "Cultural heritage and the location choice of Dutch households in a residential sorting model," Journal of Economic Geography, Oxford University Press, vol. 13(3), pages 473-500, May.
    4. Wenquan Liang & Ran Song & Christopher Timmins, 2020. "Frictional Sorting," NBER Working Papers 27643, National Bureau of Economic Research, Inc.
    5. Jie-Sheng Tan Soo, 2018. "Valuing Air Quality in Indonesia Using Households’ Locational Choices," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 755-776, November.
    6. Omar S. Arias & Carolina Sánchez-Páramo & María E. Dávalos & Indhira Santos & Erwin R. Tiongson & Carola Gruen & Natasha de Andrade Falcão & Gady Saiovici & Cesar A. Cancho, 2014. "Back to Work : Growing with Jobs in Europe and Central Asia," World Bank Publications - Books, The World Bank Group, number 16570, December.
    7. Kanbur, Ravi & Venables, Anthony J., 2005. "SPATIAL INEQUALITY AND DEVELOPMENT Overview of UNU-WIDER Project," Working Papers 127127, Cornell University, Department of Applied Economics and Management.
    8. 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.
    9. Tianyou Hu & Siddharth Natarajan & Andrew Delios, 2021. "Sister cities, cross-national FDI, and the subnational FDI location decision," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1279-1301, September.
    10. 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.

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