Industry location and wages: The role of market size and accessibility in trading networks
Entity
UAM. Departamento de Análisis Económico, Teoría Económica e Historia EconómicaDate
2018-04-22Citation
10.1016/j.regsciurbeco.2018.04.005
Regional Science and Urban Economics 71 (2018): 1-24
ISSN
0166-0462 (print); 1879-2308 (online)DOI
10.1016/j.regsciurbeco.2018.04.005Editor's Version
Elsevier B.V.Subjects
Accessibility; Industry location; Market size; Trading networks; Wages; EconomíaRights
© 2018 The AuthorsAbstract
We analyze the effects of local market size and accessibility on the spatial distribution of economic activity and wages in general equilibrium trade models with many asymmetric countries and costly trade for all goods. In models with a homogeneous sector, local market size is generally more strongly correlated with a country's industry share, whereas accessibility better explains a country's wage. We analytically show that result in a simplified case and then confirm it using simulations with random trading networks. In models with only differentiated sectors, both local market size and accessibility are highly correlated with wages. The impact of local market size on industry location is more robust than the impact of local market size on wages in economic geography models
Files in this item
Google Scholar:Barbero Jiménez, Javier
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Behrens, Kristian
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Zofío Prieto, José Luis
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