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The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy

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  • Lorenzo Caliendo
  • Fernando Parro
  • Esteban Rossi-Hansberg
  • Pierre-Daniel Sarte

Abstract

We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We find that such elasticities can vary significantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20168.

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Date of creation: May 2014
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Handle: RePEc:nbr:nberwo:20168

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Cited by:
  1. Kondo, Illenin O., 2013. "Trade Reforms, Foreign Competition, and Labor Market Adjustments in the U.S," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 1095, Board of Governors of the Federal Reserve System (U.S.).
  2. Pablo Fajgelbaum & Stephen J. Redding, 2014. "External Integration, Structural Transformation and Economic Development: Evidence From Argentina," CEP Discussion Papers dp1273, Centre for Economic Performance, LSE.
  3. Pablo Fajgelbaum & Stephen J. Redding, 2014. "External Integration, Structural Transformation and Economic Development: Evidence from Argentina 1870-1914," NBER Working Papers 20217, National Bureau of Economic Research, Inc.
  4. Ferdinando Monte, 2014. "Local Transmission of Trade Shocks," Working Papers 2014-001, Human Capital and Economic Opportunity Working Group.
  5. Trevor Tombe & Jennifer Winter, 2014. "What's Inside Counts: Migration, Taxes, and the Internal Gains from Trade," Working Papers 2013-28, Department of Economics, University of Calgary, revised 05 May 2014.

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