|
on Economic Geography |
|
Issue of 2026–05–04
nine papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Elisa Giannone; Yuhei Miyauchi; Nuno Paixao; Xinle Pang; Yuta Suzuki |
| Abstract: | How do depopulation and population aging evolve differently across regions within a country, and what are their implications for aggregate economic activity and regional inequality? Using spatially disaggregated data from Japan over the past several decades, we show that rural areas have experienced significantly faster depopulation and aging than urban areas, driven by low fertility and sustained out-migration of young cohorts. Regions undergoing these trends face declining local amenities and rising per-capita public service costs. To study the future evolution and economic consequences of these dynamics, we develop and calibrate a dynamic life-cycle spatial general equilibrium model. The model predicts widening geographic disparities in depopulation, aging, and economic activity in the coming centuries. While subsidies to declining regions can lower regional inequality, they come at the cost of lower aggregate efficiency and higher public service expenditures. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1944 |
| By: | Koller, Julian; Stefanova, Stefani |
| Abstract: | We propose a novel spatial IV approach to estimate inter-regional employment spillovers from local trade shocks and apply it to the surge of Chinese import competition in the U.S. We find strong spillovers at the local level that substantially reshape the geography of the shock's employment burden. Our results further suggest that these indirect effects propagate through input-output linkages rather than labor mobility. Moreover, we show that our estimates rationalize the roughly 30 percent gap between Autor et al. (2013) and the structural follow-up literature in the aggregate U.S. manufacturing employment decline attributed to Chinese import competition. |
| Keywords: | Trade Shocks, Local Labor Markets, Import Competition |
| JEL: | F10 F14 F16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128159 |
| By: | Horng Chern Wong; Dennis Novy; Carlo Perroni; Natalie Chen |
| Abstract: | Using French micro-data, we show that rapid structural transformation in densely populated cities is driven by the expansion of large tradable services firms and the departure of large manufacturing firms. This reallocation is accompanied by sharply rising house prices but without a compensating increase in urban nominal wages. Using a quantitative spatial equilibrium model, we highlight the role that local consumption services play in reconciling these facts. We show that structural change leads to an expansion of local services varieties, which improves amenities and moderates urban wage growth despite rising house prices. By containing labor costs, this mechanism allows large, urban-centered tradable services firms to capitalize on their fast productivity growth. As a result, the forces underlying urban-biased structural change have facilitated the rise of superstar services firms and have increased the urban-rural welfare gap, even though conventional statistics point in the opposite direction. |
| Keywords: | Agglomeration, Cities, House Prices, Services, Sorting, Structural Change |
| JEL: | R11 R12 R30 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26006 |
| By: | Calvert Jump, Robert; Scavette, Adam |
| Abstract: | No abstract available. |
| Keywords: | regional business cycles; research universities; regional resilience |
| Date: | 2024–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:gpe:wpaper:47059 |
| By: | Francesco Vidoli (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); ; |
| Abstract: | Standard policy evaluation methods typically assume that treatment effects are homogeneous within fixed administrative units. However, the true policy relevant boundaries are typically unknown to the researcher, as latent territorial characteristics, such as institutional quality or local economic structure, generate unobserved spatial heterogeneity that does not align with administrative borders. To address this challenge, we propose a novel unsupervised learning algorithm that endogenously identifies geographic regimes heterogeneous in terms of causal impact. Unlike existing clustering methods that group units based on geometric density or outcome similarity, our approach partitions spatial units specifically on the basis of their causal response to treatment. By explicitly maximizing treatment effect variance subject to spatial coherence, we identify where policies have differential impacts, recovering latent economic boundaries while maintaining identification requirements. We validate the estimator through Monte Carlo simulations, demonstrating its robustness in recovering latent economic structures even in high-noise environments. Finally, we apply the method to analyse the local labour market effects of the 2001 Chinese import competition shock in the United States, revealing distinct latent spatial regimes of industrial resilience that cut across state lines. |
| Keywords: | Difference-in-Differences, Spatial Heterogeneity, Treatment Effect Heterogeneity, Clustering Algorithms, Place-Based Policies, Causal Inference |
| JEL: | C21 C23 H40 R10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:urb:wpaper:26_01 |
| By: | Moritz Kuhn; Iourii Manovskii; Xincheng Qiu |
| Abstract: | Spatial differences in labor market performance are large and highly persistent. Using data from the United States, Germany, and the United Kingdom, we document striking similarities across these countries in the spatial differences in unemployment, vacancies, and vacancy filling, job finding, and separation rates. The novel facts on the geography of vacancies and vacancy filling are instrumental in guiding and disciplining the development of a theory of local labor market performance. We find that a spatial version of a Diamond-Mortensen-Pissarides model with endogenous separations and on-the-job search quantitatively accounts for all the documented empirical regularities. The model also quantitatively rationalizes why differences in job-separation rates have primary importance in inducing differences in unemployment across space while changes in the job-finding rate are the main driver in unemployment fluctuations over the business cycle. |
| Keywords: | Local Labor Markets, Unemployment, Vacancies, Search and Matching |
| JEL: | J63 J64 E24 E32 R13 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2596 |
| By: | Tobias Seidel; Frederic Kluser; Maximilian von Ehrlich |
| Abstract: | This paper leverages quasi-experimental variation from store openings and 1.5 billion grocery transactions to causally estimate the distance elasticity of grocery expenditures (−1.47) and the spatial extent of local consumption areas (approximately 16 minutes of car travel time). We embed these estimates in a nested CES demand framework to construct a granular index of local market access for nearly 350, 000 grid cells (100×100m) across Switzerland. Urban areas enjoy nearly twice the consumption access of rural areas, with the 90th-to-10th percentile ratio nationally exceeding four. Compensating variation calculations show that low-income and elderly households would benefit disproportionately from improved local market access. Finally, we document that market access varies predominantly between locations, whereas income differs mostly within locations—the two dimensions are nearly orthogonal. This suggests that place-based retail policies and income-based transfers address fundamentally different dimensions of spatial inequality and should be regarded as complements. |
| Keywords: | economic geography, consumption access, consumption inequality |
| JEL: | R1 R2 L14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12616 |
| By: | Gustavo Castro (Departament of Economics, University of S˜ao Paulo, Brazil); Carlos Azzoni (Departament of Economics, University of S˜ao Paulo, Brazil); André Chagas (Departament of Economics, University of S˜ao Paulo, Brazil) |
| Abstract: | Across many urban systems, cities continue to expand physically even as their populations decline. This spatial-demographic mismatch, which we refer to as shrinking but sprawling cities, raises important questions about the economic consequences of urban expansion under demographic contraction. Using data for more than 5, 500 Brazilian municipalities between 2010 and 2022, we estimate the causal impact of urban sprawl on labor productivity in municipalities experiencing population decline. To address endogeneity, we implement a two-stage least squares strategy that instruments population shrinkage using a SPEI-based shift-share design and urban sprawl using spatial diffusion in urban expansion across neighboring municipalities. We find that urban sprawl significantly reduces labor productivity growth in municipalities experiencing population decline. The negative interaction between shrinkage and sprawl is robust across sectors and to multiple robustness checks. These findings suggest that spatial expansion under demographic contraction weakens agglomeration forces and generates significant productivity losses in urban systems. |
| Keywords: | Urban Shrinkage; Urban Sprawl; Labor Productivity |
| JEL: | R11 O18 C26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:022452 |
| By: | Marguerite Obolensky; Marco Tabellini; Charles A. Taylor |
| Abstract: | This paper examines the concept of "climate matching'' in migration-the idea that migrants seek out destinations with familiar climates-and studies its implications for the geography of economic activity in the United States. We document that temperature distance between origin and destination predicts the distribution of migrants across U.S. counties, for both internal and international migration in the historical (1850-1940) and modern (1970-2019) periods. These patterns cannot be explained by the spatial correlation of climate or the persistence of ethnic networks, and instead reflect two mechanisms: the transferability of climate-specific skills and climate as an amenity. We then study the economic consequences of climate mismatch during 1880-1920, a period of rapid growth and structural transformation. Using an instrumental variable strategy that interacts origin-country inflow shocks with the timing of county railroad access, we find that mismatch reduced agricultural productivity and accelerated the exit from farming. However, manufacturing output did not rise. Instead, manufacturing productivity declined and population growth was lower in counties with higher climate mismatch. These effects left a lasting imprint: a 1°C increase in 1880--1920 mismatch is associated with 2.5% lower per capita income in 1940. |
| Keywords: | Migration, climate, climate matching, economic geography |
| JEL: | J15 J61 N31 N32 Q54 R11 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26031 |