Title: Industry location and wages: The role of market size and accessibility in trading networks
Authors: BARBERO JIMENEZ JAVIERKRISTIAN BEHRENSZOFÍO JOSE L.
Citation: REGIONAL SCIENCE AND URBAN ECONOMICS vol. 71 p. 1-24
Publisher: ELSEVIER SCIENCE BV
Publication Year: 2018
JRC N°: JRC106670
ISSN: 0166-0462
URI: https://www.sciencedirect.com/science/article/pii/S0166046218300243
http://publications.jrc.ec.europa.eu/repository/handle/JRC106670
DOI: 10.1016/j.regsciurbeco.2018.04.005
Type: Articles in periodicals and books
Abstract: 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.
JRC Directorate:Growth and Innovation

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