New economic geography models predict migration flows from peripheral regions toward central ones. Agglomeration occurs in these models because firms, which tend to locate in large demand regions, and workers, who look for high real wages, are driven by the same force defined by the market potential function. As in Hanson [1998], we estimate this function and thereby all the parameters of the standard economic geography model.
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Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
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