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The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding

Author

Listed:
  • Klaus Desmet
  • Dávid Krisztián Nagy
  • Esteban Rossi-Hansberg

Abstract

We study the relationship between geography and growth. To do so, we first develop a dynamic spatial growth theory with realistic geography. We characterize the model and its balanced growth path and propose a methodology to analyze equilibria with different levels of migration frictions. We bring the model to the data for the whole world economy at a 1°×1° geographic resolution. We then use the model to quantify the gains from relaxing migration restrictions as well as to describe the evolution of the distribution of economic activity in the different migration scenarios. Our results indicate that fully liberalizing migration would increase welfare more than three-fold and would significantly affect the evolution of particular regions in the world. We then use the model to study the effect of a spatial shock. We focus on the example of a rise in the sea level and find that coastal flooding can have an important impact on welfare by changing the geographic-dynamic path of the world economy.

Suggested Citation

  • Klaus Desmet & Dávid Krisztián Nagy & Esteban Rossi-Hansberg, 2015. "The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding," NBER Working Papers 21087, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21087
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    References listed on IDEAS

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    1. Pierre-Daniel G. Sarte & Esteban Rossi-Hansberg & Fernando Parro & Lorenzo Caliendo, 2013. "The impact of regional and sectoral productivity changes on the U.S. economy," Working Paper 13-14, Federal Reserve Bank of Richmond.
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    Cited by:

    1. Moreno-Cruz, Juan & Taylor, M. Scott, 2017. "An energy-centric theory of agglomeration," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 153-172.
    2. repec:kap:jecgro:v:23:y:2018:i:2:d:10.1007_s10887-017-9153-z is not listed on IDEAS
    3. Adriana Kocornik-Mina & Thomas K.J. McDermott & Guy Michaels & Ferdinand Rauch, 2015. "Flooded cities," GRI Working Papers 221, Grantham Research Institute on Climate Change and the Environment.
    4. Desmet, Klaus & Rossi-Hansberg, Esteban, 2015. "On the spatial economic impact of global warming," Journal of Urban Economics, Elsevier, vol. 88(C), pages 16-37.
    5. Ravikumar, B. & Santacreu, Ana Maria & Sposi, Michael J., 2017. "Capital Accumulation and Dynamic Gains from Trade," Working Papers 2017-5, Federal Reserve Bank of St. Louis.
    6. Brülhart, Marius & Carrère, Céline & Robert-Nicoud, Frédéric, 2015. "Trade and Towns: Heterogeneous Adjustment to a Border Shock," CEPR Discussion Papers 10886, C.E.P.R. Discussion Papers.
    7. repec:eee:reecon:v:72:y:2018:i:2:p:251-262 is not listed on IDEAS
    8. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
    9. repec:eee:jhouse:v:36:y:2017:i:c:p:1-7 is not listed on IDEAS
    10. Takashi Akamatsu & Tomoya Mori & Yuki Takayama, 2015. "Agglomerations in a multi-region economy: Poly-centric versus mono-centric patterns," KIER Working Papers 929, Kyoto University, Institute of Economic Research.
    11. Solomon Hsiang & Paulina Oliva & Reed Walker, 2017. "The Distribution of Environmental Damages," NBER Working Papers 23882, National Bureau of Economic Research, Inc.
    12. Nathaniel Baum-Snow & Loren Brandt & J. Vernon Henderson & Matthew A. Turner & Qinghua Zhang, 2016. "Highways, Market Access and Urban Growth in China," SERC Discussion Papers 0200, Spatial Economics Research Centre, LSE.
    13. Kahn, Matthew E. & Zhao, Daxuan, 2018. "The impact of climate change skepticism on adaptation in a market economy," Research in Economics, Elsevier, vol. 72(2), pages 251-262.
    14. Marco Delogu & Frédéric Docquier & Joël Machado, 2018. "Globalizing labor and the world economy: the role of human capital," Journal of Economic Growth, Springer, vol. 23(2), pages 223-258, June.
    15. Chen, Ying & Henderson, J. Vernon & Cai, Wei, 2017. "Political favoritism in China’s capital markets and its effect on city sizes," Journal of Urban Economics, Elsevier, vol. 98(C), pages 69-87.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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