American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Spatial Development
American Economic Review
vol. 104,
no. 4, April 2014
(pp. 1211–43)
Abstract
We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially. We apply the model to study the evolution of the US economy in the last half-century and find that it can generate the reduction in the manufacturing employment share, the increased spatial concentration of services, the growth in service productivity starting in the mid-1990s, the rise in the dispersion of land rents in the same period, as well as several other spatial and temporal patterns.Citation
Desmet, Klaus, and Esteban Rossi-Hansberg. 2014. "Spatial Development." American Economic Review, 104 (4): 1211–43. DOI: 10.1257/aer.104.4.1211Additional Materials
JEL Classification
- J21 Labor Force and Employment, Size, and Structure
- L16 Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
- L60 Industry Studies: Manufacturing: General
- L80 Industry Studies: Services: General
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R32 Other Spatial Production and Pricing Analysis