IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/6421.html
   My bibliography  Save this paper

Spatial Growth and Industry Age

Author

Listed:
  • Desmet, Klaus
  • Rossi-Hansberg, Esteban

Abstract

U.S. county data for the last 20 or 30 years show that manufacturing employment has been deconcentrating. In contrast, the service sector exhibits concentration in counties with intermediate levels of employment. This paper presents a theory where local sectoral growth is driven by technological diffusion across space. The age of an industry -- measured as the time elapsed since the last major general purpose technology innovation in the sector -- determines the pattern of scale dependence in growth rates. Young industries exhibit non-monotone relationships between employment levels and growth rates, while old industries experience negative scale dependence in growth rates. The model then predicts that the relationship between county employment growth rates and county employment levels in manufacturing at the turn of the 20th century should be similar to the same relationship in services in the last 20 years. We provide evidence consistent with this prediction.

Suggested Citation

  • Desmet, Klaus & Rossi-Hansberg, Esteban, 2007. "Spatial Growth and Industry Age," CEPR Discussion Papers 6421, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6421
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP6421
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    2. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150-150, March.
    3. Paul A. David & Gavin Wright, "undated". "General Purpose Technologies and Surges in Productivity: Historical Reflections on the Future of the ICT Revolution," Working Papers 99026, Stanford University, Department of Economics.
    4. Gilles Duranton, 2007. "Urban Evolutions: The Fast, the Slow, and the Still," American Economic Review, American Economic Association, vol. 97(1), pages 197-221, March.
    5. Esteban Rossi-Hansberg & Mark L. J. Wright, 2007. "Urban Structure and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 597-624.
    6. Eric J. Bartelsman & J. Joseph Beaulieu, 2007. "A Consistent Accounting of US Productivity Growth," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 449-482, National Bureau of Economic Research, Inc.
    7. Gilles Duranton & Diego Puga, 2001. "Nursery Cities: Urban Diversity, Process Innovation, and the Life Cycle of Products," American Economic Review, American Economic Association, vol. 91(5), pages 1454-1477, December.
    8. Vernon Henderson & Anthony Venables, 2009. "Dynamics of city formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 233-254, April.
    9. Desmet, Klaus & Fafchamps, Marcel, 2006. "Employment concentration across U.S. counties," Regional Science and Urban Economics, Elsevier, vol. 36(4), pages 482-509, July.
    10. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(4), pages 869-882.
    11. Mr. Sergio Rebelo & Ms. Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 2001/085, International Monetary Fund.
    12. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    13. Francisco J. Buera & Joseph P. Kaboski, 2012. "The Rise of the Service Economy," American Economic Review, American Economic Association, vol. 102(6), pages 2540-2569, October.
    14. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224, Elsevier.
    15. Andrew Atkeson & Patrick J. Kehoe, 2007. "Modeling the Transition to a New Economy: Lessons from Two Technological Revolutions," American Economic Review, American Economic Association, vol. 97(1), pages 64-88, March.
    16. Gust, Christopher & Marquez, Jaime, 2004. "International comparisons of productivity growth: the role of information technology and regulatory practices," Labour Economics, Elsevier, vol. 11(1), pages 33-58, February.
    17. Henderson, J. Vernon, 2005. "Urbanization and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 24, pages 1543-1591, Elsevier.
    18. Paola Caselli & Francesco Patern�, 2001. "ICT accumulation and productivity growth in the United States: an analysis based on industry data," Temi di discussione (Economic working papers) 419, Bank of Italy, Economic Research and International Relations Area.
    19. Robert E. Lucas, Jr., 2004. "Life Earnings and Rural-Urban Migration," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 29-59, February.
    20. Esteban Rossi-Hansberg, 2005. "A Spatial Theory of Trade," American Economic Review, American Economic Association, vol. 95(5), pages 1464-1491, December.
    21. Nathan Rosenberg & Manuel Trajtenberg, 2009. "A General-Purpose Technology at Work: The Corliss Steam Engine in the Late-Nineteenth-Century United States," World Scientific Book Chapters, in: Nathan Rosenberg (ed.), Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 6, pages 97-135, World Scientific Publishing Co. Pte. Ltd..
    22. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, March.
    23. Thomas J. Holmes, 2004. "Step-by-step Migrations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 52-68, January.
    24. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 739-767.
    25. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
    26. Robert H. McGuckin & Kevin Stiroh, 2000. "Computers and Productivity: Are Aggregation Effects Important?," Economics Program Working Papers 00-03, The Conference Board, Economics Program.
    27. Robert H. McGuckin, 2002. "Computers and Productivity: are Aggregation Effects Important?," Economic Inquiry, Western Economic Association International, vol. 40(1), pages 42-59, January.
    28. Bart Hobijn & Boyan Jovanovic, 2001. "The Information-Technology Revolution and the Stock Market: Evidence," American Economic Review, American Economic Association, vol. 91(5), pages 1203-1220, December.
    29. Rossi-Hansberg, Esteban, 2004. "Cities under stress," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 903-927, July.
    30. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Desmet, Klaus & Henderson, J. Vernon, 2015. "The Geography of Development Within Countries," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1457-1517, Elsevier.
    2. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    3. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    4. Gilles Duranton, 2007. "From cities to productivity and growth in developing countries," Working Papers tecipa-306, University of Toronto, Department of Economics.
    5. Klaus Desmet & Esteban Rossi-Hansberg, 2014. "Spatial Development," American Economic Review, American Economic Association, vol. 104(4), pages 1211-1243, April.
    6. Guy Michaels & Ferdinand Rauch & Stephen J. Redding, 2012. "Urbanization and Structural Transformation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 535-586.
    7. repec:esx:essedp:729 is not listed on IDEAS
    8. Behrens, Kristian & Robert-Nicoud, Frédéric, 2015. "Agglomeration Theory with Heterogeneous Agents," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 171-245, Elsevier.
    9. Harald Edquist & Magnus Henrekson, 2006. "Technological Breakthroughs and Productivity Growth," Research in Economic History, in: Research in Economic History, pages 1-53, Emerald Group Publishing Limited.
    10. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2015. "Endowment structures, industrial dynamics, and economic growth," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 244-263.
    11. Fedderke, Johannes W., 2018. "Exploring unbalanced growth: Understanding the sectoral structure of the South African economy," Economic Modelling, Elsevier, vol. 72(C), pages 177-189.
    12. Kemeny, Tom & Petralia, Sergio & Storper, Michael, 2022. "Disruptive innovation and spatial inequality," LSE Research Online Documents on Economics 115953, London School of Economics and Political Science, LSE Library.
    13. Garriga, Carlos & Hedlund, Aaron & Tang, Yang & Wang, Ping, 2021. "Rural-urban migration and house prices in China," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    14. Gilles Duranton & Diego Puga, 2023. "Urban Growth and Its Aggregate Implications," Econometrica, Econometric Society, vol. 91(6), pages 2219-2259, November.
    15. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
    16. Stephen J. Redding, 2013. "Economic Geography: A Review of the Theoretical and Empirical Literature," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 16, pages 497-531, Palgrave Macmillan.
    17. Uwe Cantner & Simone Vannuccini, 2012. "A New View of General Purpose Technologies," Jena Economics Research Papers 2012-054, Friedrich-Schiller-University Jena.
    18. Buera, Francisco J. & Kaboski, Joseph P., 2012. "Scale and the origins of structural change," Journal of Economic Theory, Elsevier, vol. 147(2), pages 684-712.
    19. Gilles DURANTON, 2012. "La Croissance Urbaine : Déterminismes Vs Bruit," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 36, pages 11-30.
    20. J. Vernon Henderson & Matthew A. Turner, 2020. "Urbanization in the Developing World: Too Early or Too Slow?," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 150-173, Summer.
    21. Bresnahan, Timothy, 2010. "General Purpose Technologies," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 761-791, Elsevier.

    More about this item

    Keywords

    Industry age; Scale dependence; Spatial growth; Us counties;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6421. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.