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Spatial Structural Change

Author

Listed:
  • Fabian Eckert

    (Yale University)

  • Michael Peters

    (Yale University)

Abstract

Abstract This paper studies the spatial implications of structural change. By shifting demand towards non-agricultural goods, the structural transformation benefits workers in urban centers and hurts rural locations. At the aggregate level, the economy can respond either through a reallocation of labor from rural to urban areas or through a reduction in agricultural employment within a given location. Using detailed spatial data for the U.S. between 1880 and 2000, we show that spatial reallocation accounts for almost none of the aggregate decline in agricultural employment. We interpret this fact through the lens of a novel quantitative theory of spatial structural change, and show that the absence of the spatial reallocation channel is primarily due to regional productivity shocks, which almost entirely offset the urban bias of the structural transformation. Frictions to labor mobility meanwhile are quantitatively unimportant. The model implies that spatial welfare differences declined substantially during the United States' structural transformation and that the spatial reallocation of factors can account for about 15% of aggregate growth since 1880.

Suggested Citation

  • Fabian Eckert & Michael Peters, 2018. "Spatial Structural Change," 2018 Meeting Papers 98, Society for Economic Dynamics.
  • Handle: RePEc:red:sed018:98
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    File URL: https://economicdynamics.org/meetpapers/2018/paper_98.pdf
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    References listed on IDEAS

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    1. Alvarez-Cuadrado, Francisco & Long, Ngo & Poschke, Markus, 2017. "Capital-labor substitution, structural change and growth," Theoretical Economics, Econometric Society, vol. 12(3), September.
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    7. repec:oup:restud:v:86:y:2019:i:1:p:333-376. is not listed on IDEAS
    8. Rodrigo Adao & Costas Arkolakis & Federico Esposito, 2018. "Trade, Agglomeration Effects, and Labor Markets: Theory and Evidence," 2018 Meeting Papers 545, Society for Economic Dynamics.
    9. Porzio, Tommaso & Santangelo, Gabriella, 2017. "Structural Change and the Supply of Agricultural Workers," CEPR Discussion Papers 12495, C.E.P.R. Discussion Papers.
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    11. Pablo D Fajgelbaum & Eduardo Morales & Juan Carlos Suárez Serrato & Owen Zidar, 2019. "State Taxes and Spatial Misallocation," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 333-376.
    12. Berthold Herrendorf & Christopher Herrington & Ákos Valentinyi, 2015. "Sectoral Technology and Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 104-133, October.
    13. Gharad Bryan & Melanie Morten, 2017. "The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia," NBER Working Papers 23540, National Bureau of Economic Research, Inc.
    14. Todd Schoellman & Bart Hobijn, 2017. "Structural Transformation by Cohort," 2017 Meeting Papers 1417, Society for Economic Dynamics.
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    Cited by:

    1. Rodrigo Adão & Costas Arkolakis & Federico Espósito, 2019. "Spatial Linkages, Global Shocks, and Local Labor Markets: Theory and Evidence," Cowles Foundation Discussion Papers 2163, Cowles Foundation for Research in Economics, Yale University.

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