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A Spatial Knowledge Economy

  • Donald R. Davis
  • Jonathan I. Dingel

Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. Our model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities, how variation in these premia emerges from symmetric fundamentals, and why skilled workers have higher migration rates than unskilled workers when both are fully mobile.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18188.

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Date of creation: Jun 2012
Date of revision:
Handle: RePEc:nbr:nberwo:18188
Note: ITI LS
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  1. Gordon Dahl, 1997. "Mobility and the Returns to Education: Testing A Roy Model With Multiple Markets," Working Papers 760, Princeton University, Department of Economics, Industrial Relations Section..
  2. Rainald Borck & Michael Pflüger & Matthias Wrede, 2010. "A simple theory of industry location and residence choice," Journal of Economic Geography, Oxford University Press, vol. 10(6), pages 913-940, November.
  3. Berliant, Marcus & Reed III, Robert R. & Wang, Ping, 2006. "Knowledge exchange, matching, and agglomeration," Journal of Urban Economics, Elsevier, vol. 60(1), pages 69-95, July.
  4. Eeckhout, Jan & Pinheiro, Roberto & Schmidheiny, Kurt, 2010. "Spatial Sorting: Why New York, Los Angeles and Detroit attract the greatest minds as well as the unskilled," CEPR Discussion Papers 8151, C.E.P.R. Discussion Papers.
  5. Dan Black & Natalia Kolesnikova & Lowell J. Taylor, 2007. "Earnings functions when wages and prices vary by location," Working Papers 2007-031, Federal Reserve Bank of St. Louis.
  6. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
  7. Sylvie Charlot & Gilles Duranton, 2003. "Communication Externalities in Cities," CEP Discussion Papers dp0592, Centre for Economic Performance, LSE.
  8. Emi Nakamura & J?n Steinsson, 2014. "Fiscal Stimulus in a Monetary Union: Evidence from US Regions," American Economic Review, American Economic Association, vol. 104(3), pages 753-92, March.
  9. Masahisa Fujita & Marcus Berliant, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," Econometric Society 2004 North American Summer Meetings 204, Econometric Society.
  10. Jorge De la Roca, 2011. "Selection in initial and return migration: Evidence from moves across Spanish cities," Working Papers 2011-21, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  11. Robert E. Lucas, Jr. & Benjamin Moll, 2011. "Knowledge Growth and the Allocation of Time," NBER Working Papers 17495, National Bureau of Economic Research, Inc.
  12. Mohammad Arzaghi & J. Vernon Henderson, 2008. "Networking off Madison Avenue," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1011-1038.
  13. Paul Beaudry & Mark Doms & Ethan Lewis, 2010. "Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 988 - 1036.
  14. Nathaniel Baum-Snow & Ronni Pavan, 2013. "Inequality and City Size," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1535-1548, December.
  15. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2013. "Superstar Cities," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 167-99, November.
  16. Steve Gibbons & Henry G. Overman & Panu Pelkonen, 2010. "Wage Disparities in Britain: People or Place?," SERC Discussion Papers 0060, Spatial Economics Research Centre, LSE.
  17. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August.
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