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In Search of a Spatial Equilibrium in the Developing World

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  • Douglas Gollin
  • Martina Kirchberger
  • David Lagakos

Abstract

In most developing countries, there is a large gap in average consumption per capita between urban and rural areas. One appealing interpretation of this gap is that it reflects a spatial equilibrium, in which the higher consumption levels of urban areas are offset by lower non-monetary amenities. In this paper, we draw on new high-resolution evidence to document how non-monetary amenities vary across space within 20 developing countries. We focus on measures of health, public goods, crime and pollution. These vary substantially across locations within countries and can be carefully measured with highly comparable data. We find that in almost all countries, and for almost all measures, the quality of these amenities is non-decreasing in population density. In addition, net internal migration flows are directed toward denser areas in every country. These findings are hard to reconcile with a spatial equilibrium. Instead, they suggest that developing countries are undergoing a reallocation of workers to densely populated areas, consistent with many models of structural change but inconsistent with models that assume a simple static spatial equilibrium.

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  • Douglas Gollin & Martina Kirchberger & David Lagakos, 2017. "In Search of a Spatial Equilibrium in the Developing World," NBER Working Papers 23916, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23916
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    8. Gharad Bryan & Edward Glaeser & Nick Tsivanidis, 2019. "Cities in the Developing World," NBER Working Papers 26390, National Bureau of Economic Research, Inc.
    9. De Weerdt,Joachim & Christiaensen,Luc & Kanbur,Ravi, 2021. "When Distance Drives Destination, Towns Can Stimulate Development," Policy Research Working Paper Series 9622, The World Bank.
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    16. Baysan, Ceren & Dar, Manzoor H. & Emerick, Kyle & Sadoulet, Elisabeth, 2019. "The agricultural wage gap within rural villages," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8kq8z35d, Department of Agricultural & Resource Economics, UC Berkeley.
    17. Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2020. "Chinese development assistance and household welfare in Sub-Saharan Africa," World Development, Elsevier, vol. 129(C).
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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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