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Industrial structure in urban accounting

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  • Oshiro, Jun
  • Sato, Yasuhiro

Abstract

We develop a multisector general equilibrium model of a system of cities to examine the quantitative significance of the industrial structure in determining the spatial structure. We identify three types of wedges: the efficiency wedge, the labor wedge, and amenity, which capture the extent to which the standard urban economics model fails to explain the observed characteristics empirically. We then calibrate the model to Japanese regional data and conduct counterfactual exercises to identify the significance of each wedge in each sector. We show that the labor wedge, which represents various labor market distortions, plays a primary role in determining the spatial structure and that the secondary sector is the most influential.

Suggested Citation

  • Oshiro, Jun & Sato, Yasuhiro, 2021. "Industrial structure in urban accounting," Regional Science and Urban Economics, Elsevier, vol. 91(C).
  • Handle: RePEc:eee:regeco:v:91:y:2021:i:c:s0166046220302611
    DOI: 10.1016/j.regsciurbeco.2020.103576
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