IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/32377.html
   My bibliography  Save this paper

Cities, Heterogeneous Firms, and Trade

Author

Listed:
  • Jan David Bakker
  • Alvaro Garcia Marin
  • Andrei V. Potlogea
  • Nico Voigtländer
  • Yang Yang

Abstract

Does international trade affect the growth of cities, and vice versa? Assembling disaggregate data for four countries, we document a novel stylized fact: Export activity is disproportionately concentrated in larger cities – even more so than overall economic activity. We rationalize this fact by marrying a standard quantitative spatial economics model with a heterogeneous firm model that features selection into the domestic and the export market. Our model delivers novel predictions for the bi-directional interactions between trade and urban dynamics: On the one hand, trade liberalization shifts employment towards larger cities, and on the other hand, liberalizing land use raises exports. We structurally estimate the model using data for the universe of Chinese manufacturing and French firms. We find that trade policies have quantitatively meaningful impacts on urban outcomes and vice versa, and that the aggregate effects of trade and urban policies differ from more standard models that do not account for the interaction between trade and cities. In addition, a distinguishing prediction of our model – which we confirm in the data – is that local trade elasticities vary systematically with city size, so that a country's aggregate trade elasticity depends on the spatial distribution of production within its borders.

Suggested Citation

  • Jan David Bakker & Alvaro Garcia Marin & Andrei V. Potlogea & Nico Voigtländer & Yang Yang, 2024. "Cities, Heterogeneous Firms, and Trade," NBER Working Papers 32377, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:32377
    Note: DEV EFG ITI PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w32377.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

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

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • 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:nbr:nberwo:32377. 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.

    We have no bibliographic references for this item. You can help adding them by using 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://edirc.repec.org/data/nberrus.html .

    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.