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On the Contribution of Agglomeration Economies to Spatial Concentration of US Employment

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  • Satyajit Chatterjee

Abstract

In this paper I explore,via a quantitative spatial macroeconomic model, the contribution of agglomeration economies to the observed spatial concentration of US employment. The approach is analogous to "growth accounting." The results of the "spatial accounting" depend on the details of the model used. The critical detail pertains to how the model rationalizes the stability of low-density localities. If it is rationalized via an appeal to restrictions on labor mobility, the accounting implies that the bulk of spatial concentration results from an unequal distribution of natural advantages. In contrast, if it is rationalized via an agglomeration threshold (an employment level below which local increasing returns do not operate),the accounting implies that the bulk of the spatial concentration results from increasing returns

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Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 164.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:164

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Keywords: Agglomeration Economies; Natural Advantage; Density; Congestion;

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  1. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
  2. Donald R. Davis & David E. Weinstein, 2002. "Bones, bombs and break points: The geography of economic activity," Discussion Papers 0102-02, Columbia University, Department of Economics.
  3. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  4. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
  5. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  6. Segal, David, 1976. "Are There Returns to Scale in City Size?," The Review of Economics and Statistics, MIT Press, vol. 58(3), pages 339-50, August.
  7. Sveikauskas, Leo A, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, MIT Press, vol. 89(3), pages 393-413, August.
  8. Jordan Rappaport & Jeffrey D. Sachs, 2001. "The U.S. as a coastal nation," Research Working Paper RWP 01-11, Federal Reserve Bank of Kansas City.
  9. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  10. Chatterjee, Satyajit & Carlino, Gerald A., 2001. "Aggregate metropolitan employment growth and the deconcentration of metropolitan employment," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 549-583, December.
  11. Gerald Carlino & Satyajit Chatterjee, 2001. "Employment deconcentration: a new perspective on America's postwar urban evolution," Working Papers 01-4, Federal Reserve Bank of Philadelphia.
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