当代中国经济与社会工作室
Fudan Lab for China Development Studies

 

Ufuk, A., Salomé, B., & Stefanie, S. (2016). Taxation and the International Mobility of Inventors. American Economic Review, 106(10), 2930-2981.

 

Abstract: We study the effect of top tax rates on “superstar” inventors’ international mobility since 1977, using panel data on inventors from the US and European Patent Offices. We exploit the differential impact of changes in top tax rates on inventors of different qualities. Superstar inventors’ location choices are significantly affected by top tax rates. In our preferred specification, the elasticity to the net-of-tax rate of the number of domestic superstar inventors is around 0.03, while that of foreign superstar inventors is around 1. These elasticities are larger for inventors in multinational companies. An inventor is less sensitive to taxes in a country if his company performs a higher share of its research there.

 

Hendricks, L. (2011). The skill composition of US cities. International economic review, 52(1), 1-32.

 

Abstract: This article explores why the fraction of highly educated workers varies across U.S. metropolitan areas. It documents a set of facts that pose challenges for a number of theories. Notably, (i) cities are characterized by industry neutral differences in skilled labor productivity and (ii) the size of the business services sector is strongly correlated with cities' skill compositions. Motivated by these observations, I propose an input sharing model, in which nontraded business services complement skilled labor. I show that the model accounts for all of the empirical regularities documented in the article.

 

David Atkin, Benjamin Faber, Marco Gonzalez-Navarro (2016). Retail Globalization and Household Welfare: Evidence from Mexico, NBER Working Paper No. 21176

 

Abstract: The arrival of global retail chains in developing countries is causing a radical transformation in the way households source their consumption. This paper draws on a rich collection of Mexican micro data to estimate the effect of foreign supermarket entry on household welfare, and decomposes this effect into six channels. We find foreign entry causes large welfare gains for the average household predominantly driven by a reduction in the cost of living-both through price reductions at domestic stores and through the direct consumer gains from foreign stores. These gains are on average positive for all income groups but are regressive.

 

Margarida Duarte, Diego Restuccia. (2017) Relative Prices and Sectoral Productivity, NBER Working Paper

 

Abstract: The relative price of services rises with development. A standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services. The service sector comprises heterogeneous categories. We document the behavior of relative prices and expenditure shares across two broad classifications of services: traditional services, such as health and education, featuring a rising relative price with development, and non-traditional services, such as communication and transportation, featuring a falling relative price. We find a strong reallocation of real expenditures from traditional to nontraditional services with development. Using a standard multi-sector model extended to incorporate an input-output structure, we show that cross-country productivity differences are much larger in non-traditional services (a factor of 106.5-fold between rich and poor countries) than in manufacturing (only 24.5-fold). Moreover, the productivity difference between non-traditional services and manufacturing is reduced by half when abstracting from intermediate inputs. Development requires solving the productivity problem in non-traditional services in poor countries.

 

Richard Rogerson. (2008). Structural Transformation and the Deterioration of European Labor Market Outcomes. Journal of Political Economy, 116(2), 235-259.

 

Abstract: This paper examines hours worked in continental Europe and the United States from 1956 to 2003. The empirical work establishes two results. First, hours worked in Europe decline by almost 45 percent compared to the United States over this period. Second, this decline is almost entirely accounted for by the fact that Europe develops a much smaller market service sector than the United States. A simple model of time allocation is used to understand these patterns. I find that relative increases in taxes and technological catch-up can account for most of the differences between the European and American time allocations over this period.

 

Angrist, J. D., Cohodes, S. R., Dynarski, S. M., Pathak, P. A., & Walters, C. R. (2016). Stand and Deliver: Effects of Boston’s Charter High Schools on College Preparation, Entry, and Choice. Journal of Labor Economics, 34(2), 275-318. 

 

Abstract: We use admissions lotteries to estimate effects of attendance at Boston’s charter high schools on college preparation and enrollment. Charter schools increase pass rates on Massachusetts’ high-stakes exit exam, with large effects on the likelihood of qualifying for a state-sponsored scholarship. Charter attendance also boosts SAT scores sharply and increases the likelihood of taking an Advanced Placement (AP) exam, the number of AP exams taken, and AP scores. Charters induce a substantial shift from 2- to 4-year institutions, though the effect on overall college enrollment is modest. Charter effects on college-related outcomes are strongly correlated with charter effects on earlier tests.

 

 

四万亿和地方债务，建议四篇文章一起报告（2个小时）

 

Huang Y, Pagano M, Panizza U. Local Crowding Out in China[R]. 2017.

Bai, Chong-En, Chang-Tai Hsieh, and Zheng (Michael) Song (2016). .The Long Shadow of a Fiscal Expansion,.Brookings Papers in Economic Activity, Fall, 129-181.

Chen, Zhuo, Zhiguo He, and Chun Liu (2016). .The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes,.Working Paper,  University of Chicago.

Cong, Lin William, Haoyu Gao, Jacopo Ponticelli, and Xiaoguang Yang (2017). .Credit Allocation under Economic Stimulus: Evidence from China,. SSRN Working Paper No. 2862101

 

 

 

Ayumu Ken Kikkawaa ,Imperfect Competition and the Transmission of Shocks: The Network Matters, Job Market Paper

 

Abstract: This paper studies the aggregate implications of the firm-to-firm production network structure. Using a dataset on all domestic transactions between Belgian firms, we establish two facts: firms charge higher markups if they have higher input shares within their customers, and firms experience larger churn of suppliers if they face a larger reduction in foreign goods’ prices. Motivated by these two facts, we build a model where firms compete as oligopolies to supply inputs to each customer and where firms optimally choose their suppliers. The network structure becomes irrelevant in a benchmark case where we impose perfect competition and hold the network fixed. In this case, firm-level variables are suffcient to compute the welfare response to a large fall in import prices. Allowing for oligopolistic competition generates two counteracting forces within supplier-customer pairs. A supplier raises its markup to a customer when its costs decline, but it reduces the markup if other firms supplying the same customer receive the shock. Further, allowing for endogenous networks amplifies the impact of the shock as firms begin importing and begin sourcing from other firms exposed to the import shock. Due to the omission of these dynamics, the aggregate response in the benchmark case is less than one quarter of those in the full estimated model.

 

建议搭配Ayumu Ken Kikkawa关于Network的其他研究，比如：Trade and Domestic Production Networks

 

 

Chetty R. Sufficient statistics for welfare analysis: A bridge between structural and reduced-form methods[R]. National Bureau of Economic Research, 2008.

 

Abstract: The debate between "structural" and "reduced-form" approaches has generated substantial controversy in applied economics. This article reviews a recent literature in public economics that combines the advantages of reduced-form strategies -- transparent and credible identification -- with an important advantage of structural models -- the ability to make predictions about counterfactual outcomes and welfare. This recent work has developed formulas for the welfare consequences of various policies that are functions of high-level elasticities rather than deep primitives. These formulas provide theoretical guidance for the measurement of treatment effects using program evaluation methods. I present a general framework that shows how many policy questions can be answered by identifying a small set of sufficient statistics. I use this framework to synthesize the modern literature on taxation, social insurance, and behavioral welfare economics. Finally, I discuss topics in labor economics, industrial organization, and macroeconomics that can be tackled using the sufficient statistic approach.

 

Saez E, Zucman G. Wealth inequality in the United States since 1913: Evidence from capitalized income tax data[R]. National bureau of economic research, 2014.

 

Abstract: This paper combines income tax returns with Flow of Funds data to estimate the distribution of household wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations' tax records. Wealth concentration has followed a U-shaped evolution over the last 100 years: It was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The rise of wealth inequality is almost entirely due to the rise of the top 0.1% wealth share, from 7% in 1979 to 22% in 2012--a level almost as high as in 1929. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.

 

Malmendier U, Nagel S. Learning from inflation experiences*[J]. The Quarterly Journal of Economics, 2015: qjv037.

 

Abstract: How do individuals form expectations about future inflation? We propose that individuals overweight inflation experienced during their lifetimes. This approach modifies existing adaptive learning models to allow for age-dependent updating of expectations in response to inflation surprises. Young individuals update their expectations more strongly than older individuals since recent experiences account for a greater share of their accumulated lifetime history. We find support for these predictions using 57 years of microdata on inflation expectations from the Reuters/Michigan Survey of Consumers. Differences in experiences strongly predict differences in expectations, including the substantial disagreement between young and old individuals in periods of highly volatile inflation, such as the 1970s. It also explains household borrowing and lending behavior, including the choice of mortgages.

 

 

 

城市经济学

 

理论与实证结合的文章：

 

Serrato J C S, Zidar O. Who benefits from state corporate tax cuts? A local labor markets approach with heterogeneous firms[J]. The American Economic Review, 2016, 106(9): 2582-2624.

 

Abstract: This paper estimates the incidence of state corporate taxes on workers, landowners, and firm owners in a spatial equilibrium model in which corporate taxes affect the location choices of both firms and workers. Heterogeneous, location-specific productivities and preferences determine the mobility of firms and workers, respectively. Owners of monopolistically competitive firms receive economic profits and may bear the incidence of corporate taxes as heterogeneous productivity can make them inframarginal in their location choices. We derive a simple expression for equilibrium incidence as a function of a few estimable parameters. Using variation in state corporate tax rates and apportionment rules, we estimate the reduced-form effects of tax changes on firm and worker location decisions, wages, and rental costs. We then use minimum distance methods to recover the parameters that determine equilibrium incidence as a function of these reduced-form effects. In contrast to previous assumptions of infinitely mobile firms and perfectly immobile workers, we find that firms are only approximately twice as mobile as workers over a ten-year period. This fact, along with equilibrium impacts on the housing market, implies that firm owners bear roughly 40% of the incidence, while workers and land owners bear 35% and 25%, respectively. Finally, we derive revenue-maximizing state corporate tax rates and discuss interactions with other local taxes and apportionment formulae.

 

Ciccone A, Papaioannou E. Estimating Cross-Industry Cross-Country Interaction Models Using Benchmark Industry Characteristics[R]. National Bureau of Economic Research, 2016.

 

Abstract: Empirical cross-industry cross-country models are applied widely in economics, for example to investigate the determinants of economic growth or international trade. Estimation generally relies on US proxies for unobservable technological industry characteristics, for example industries' dependence on external finance or relationship-specific inputs. We examine the properties of the estimator and find that estimates can be biased towards zero (attenuated) or away from zero (amplified), depending on how technological similarity with the US covaries with other country characteristics. We also develop an alternative estimator that yields a lower bound on the true effect in cross-industry cross-country models of comparative advantage.

 

David, Joel M., Hugo A. Hopenhayn, and Venky Venkateswaran. "Information, misallocation and aggregate productivity." The Quarterly Journal of Economics (2016): qjw006.

 

Abstract: We propose a theory linking imperfect information to resource misallocation and hence to aggregate productivity and output. In our setup, firms look to a variety of noisy information sources when making input decisions. We devise a novel empirical strategy that uses a combination of firm-level production and stock market data to pin down the information structure in the economy. Even when only capital is chosen under imperfect information, applying this methodology to data from the United States, China, and India reveals substantial losses in productivity and output due to the informational friction. Our estimates for these losses range from 7% to 10% for productivity and 10% to 14% for output in China and India, and are smaller, though still significant, in the United States. Losses are substantially higher when labor decisions are also made under imperfect information. We find that firms turn primarily to internal sources for information; learning from financial markets contributes little, even in the United States.

 

 

 

 宏观发展的一系列文章

 

 

 

Gollin D. Getting income shares right[J]. Journal of political Economy, 2002, 110(2): 458-474.

 

Abstract: Many widely used economic models implicitly assume that income shares should be identical across time and space. Although time-series data from industrial countries appear consistent with this notion, cross-section data generally appear to contradict%the assumption. A commonly used calculation suggests that labor shares of national income vary from about .05 to about .80 in international cross-section data. This paper suggests that the usual approach underestimates labor income in small firms. Several adjustments for calculating labor shares are identified and compared. They all yield labor shares for most countries in the range of .65-.80. 

 

Henderson J V, Storeygard A, Weil D N. Measuring economic growth from outer space[J]. The American Economic Review, 2012, 102(2): 994-1028.

 

Abstract: We develop a statistical framework to use satellite data on night lights to augment official income growth measures. For countries with poor national income accounts, the optimal estimate of growth is a composite with roughly equal weights on conventionally measured growth and growth predicted from lights. Our estimates differ from official data by up to three percentage points annually. Using lights, empirical analyses of growth need no longer use countries as the unit of analysis; we can measure growth for sub- and supranational regions. We show, for example, that coastal areas in sub-Saharan Africa are growing slower than the hinterland.

 

Caselli F, Feyrer J. The marginal product of capital[J]. The quarterly journal of economics, 2007, 122(2): 535-568.

 

Abstract: Whether or not the marginal product of capital (MPK) differs across countries is a question that keeps coming up in discussions of comparative economic development and patterns of capital flows. Using easily accessible macroeconomic data we find thatMPKs are remarkably similar across countries. Hence, there is no prima facie support for the view that international credit frictions play a major -role in preventing capital flows from rich to poor countries. Lower capital ratios in these countries areinstead attributable to lower endowments of complementary factors and lower efficiency, as well as to lower prices of output goods relative to capital. We also show that properly accounting for the share of income accruing to reproducible capital is critical to reach these conclusions. One implication of our findings is that increased aid flows to developing countries will not significantly increase these countries capital stocks and incomes. 

 

Schoellman T. Education quality and development accounting[J]. The Review of Economic Studies, 2011, 79(1): 388-417.

 

Abstract: This paper measures the role of quality-adjusted years of schooling in accounting for cross-country output per worker differences. While data on years of schooling are readily available, data on education quality are not. I use the returns to schooling of foreign-educated immigrants in the U.S. to measure the education quality of their birth country. Immigrants from developed countries earn higher returns than do immigrants from developing countries. I show how to incorporate this measure of education quality into an otherwise standard development accounting exercise. The main result is that cross-country differences in education quality are roughly as important as cross-country differences in years of schooling in accounting for output per worker differences, raising the total contribution of education from 10% to 20% of output per worker differences. 

 

Lagakos D, Moll B, Porzio T, et al. Life-Cycle Human Capital Accumulation Across Countries: Lessons From US Immigrants[R]. National Bureau of Economic Research, 2016.

 

Abstract: How much does life-cycle human capital accumulation vary across countries? This paper seeks to answer this question by studying U.S. immigrants, who come from a wide variety of countries but work in a common labor market. We document that returns to potential experience among U.S. immigrants are higher on average for workers coming from rich countries than for those coming from poor countries. To understand this fact we build a model of life-cycle human capital accumulation that features three potential theories, working respectively through cross-country differences in: selection, skill loss, and human capital accumulation. To distinguish between theories, we use new data on the characteristics of immigrants and non-migrants from a large set of countries. We conclude that the most likely theory is that immigrants from poor countries accumulate relatively less human capital in their birth countries before migrating. Our findings imply that life cycle human capital stocks are on average much larger in rich countries than poor countries.

 

Schmitz Jr J A. What determines productivity? Lessons from the dramatic recovery of the US and Canadian iron ore industries following their early 1980s crisis[J]. Journal of political Economy, 2005, 113(3): 582-625.

 

Abstract: Great Lakes iron ore producers had faced no competition from foreign iron ore in the Great Lakes steel market for nearly a century as the 1970s closed. In the early 1980s, as a result of unprecedented developments in the world steel market, Brazilian producers were offering to deliver iron ore to Chicago (the heart of the Great Lakes market) at prices substantially below prices of local iron ore. The U.S. and Canadian iron ore industries faced a major crisis that cast doubt on their future. In response to the crisis, these industries dramatically increased productivity. Labor productivity doubled in a few years.

 

Gollin D, Lagakos D, Waugh M E. The agricultural productivity gap[J]. The Quarterly Journal of Economics, 2013, 129(2): 939-993.

 

Abstract: According to national accounts data, value added per worker is much higher in the nonagricultural sector than in agriculture in the typical country, particularly in developing countries. Taken at face value, this “agricultural productivity gap” suggests that labor is greatly misallocated across sectors. In this article, we draw on new micro evidence to ask to what extent the gap is still present when better measures of sector labor inputs and value added are taken into consideration. We find that even after considering sector differences in hours worked and human capital per worker, as well as alternative measures of sector output constructed from household survey data, a puzzlingly large gap remains.

 

Herrendorf B, Schoellman T. Why is measured productivity so low in agriculture?[J]. Review of Economic Dynamics, 2015, 18(4): 1003-1022.

 

Abstract: In poor countries, labor productivity in agriculture is considerably lower than in the rest of the economy. We assess whether this well-known fact implies that labor is mis-allocated between the two sectors. We make several observations that suggest otherwise. First, the same fact holds for US states where severe mis-allocation is implausible. Second, the gaps between the marginal value products of agriculture and non-agriculture are considerably smaller when measured through wages than through labor productivities. Third, labor productivity in agriculture is severely mis-measured in the US.

 

 

实证方法

 

 

de Chaisemartin, C. and X. D'Haultfoeuille. Fuzzy Differences-in-Differences[J]. Review of Economic Studies, 2017, 01: 1-30.

 

Abstract: Difference-in-differences (DID) is a method to evaluate the effect of a treatment. In its basic version, a "control group" is untreated at two dates, whereas a "treatment group" becomes fully treated at the second date. However, in many applications of the DID method, the treatment rate only increases more in the treatment group. In such fuzzy designs, a popular estimator of the treatment effect is the DID of the outcome divided by the DID of the treatment. We show that this ratio identifies a local average treatment effect only if the effect of the treatment is stable over time, and if the effect of the treatment is the same in the treatment and in the control group. We then propose two alternative estimands that do not rely on any assumption on treatment effects, and that can be used when the treatment rate does not change over time in the control group. We prove that the corresponding estimators are asymptotically normal. Finally, we use our results to revisit Duo (2001).

 

Knoll, Katharina, Moritz Schularick, and Thomas Steger. "No price like home: global house prices, 1870–2012." The American Economic Review 107.2 (2017): 331-353.

 

Abstract: How have house prices evolved over the long run? This paper presents annual house prices for 14 advanced economies since 1870. We show that real house prices stayed constant from the nineteenth to the mid-twentieth century, but rose strongly and with substantial cross-country variation in the second half of the twentieth century. Land prices, not replacement costs, are the key to understanding the trajectory of house prices. Rising land prices explain about 80 percent of the global house price boom that has taken place since World War II. Our findings have implications for the evolution of wealth-to-income ratios, the growth effects of agglomeration, and the price elasticity of housing supply.

 

Garicano, Luis, Claire Lelarge, and John Van Reenen. "Firm size distortions and the productivity distribution: Evidence from France." The American Economic Review 106.11 (2016): 3439-3479.

 

Abstract: We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where many labor laws start to bind on firms with 50 or more employees. Using population data on firms between 1995 and 2007, we structurally estimate the key parameters of our model to construct counterfactual size, productivity, and welfare distributions. We find that the cost of these regulations is equivalent to that of a 2.3 percent variable tax on labor. In our baseline case with French levels of partial real wage inflexibility, welfare costs of the regulations are 3.4 percent of GDP (falling to 1.3 percent if real wages were perfectly flexible downward). The main losers from the regulation are workers—and to a lesser extent, large firms—and the main winners are small firms.

 

David Lagakos, Ahmed Mushfiq Mobarak, Michael E. Waugh (2018). The Welfare Effects of Encouraging Rural-Urban Migration. NBER Working Paper.

 

Abstract: This paper studies the welfare effects of encouraging rural-urban migration in the developing world. To do so, we build a dynamic incomplete-markets model of migration in which heterogenous agents face seasonal income fluctuations, stochastic income shocks, and disutility of migration that depends on past migration experience. We calibrate the model to replicate a field experiment that subsidized migration in rural Bangladesh, leading to significant increases in both migration rates and in consumption for induced migrants. The model’s welfare predictions for migration subsidies are driven by two main features of the model and data: first, induced migrants tend to be negatively selected on income and assets; second, the model’s non-monetary disutility of migration is substantial, which we validate using using newly collected survey data from this same experimental sample. The average welfare gains are similar in magnitude to those obtained from an unconditional cash transfer, though migration subsidies lead to larger gains for the poorest households, which have the greatest propensity to migrate.

 

Lagakos, D. (2016). Explaining Cross-Country Productivity Differences in Retail Trade. Journal of Political Economy, 124(2), 579-620. 

 

Abstract: Many macroeconomists argue that productivity is low in developing countries because of frictions that impede the adoption of modern technologies. I argue that in the retail trade sector, developing countries rationally choose technologies with low measured labor productivity. My theory is that the adoption of modern retail technologies is optimal only when household ownership of complementary durable goods, such as cars, is widespread. Because income is low in the developing world, households own few such durables. The theory implies that policies that increase measured retail productivity do not necessarily increase welfare.

 

Andrew D. Foster & Mark R. Rosenzweig, 2017. "Are There Too Many Farms in the World? Labor-Market Transaction Costs, Machine Capacities and Optimal Farm Size," NBER Working Paper.

 

Abstract: This paper seeks to explain the U-shaped relationship between farm productivity and farm scale - the initial fall in productivity as farm size increases from its lowest levels and the continuous upward trajectory as scale increases after a threshold - observed across the world and in low-income countries. We show that the existence of labor-market transaction costs can explain why the smallest farms are most efficient, slightly larger farms least efficient and larger farms as efficient as the smallest farms. We show that to explain the rising upper tail of the U characteristic of high-income countries requires there be economies of scale in the ability of machines to accomplish tasks at lower costs at greater operational scales. Using data from the India ICRISAT VLS panel survey we find evidence consistent with these conditions, suggesting that there are too many farms, at scales insufficient to exploit locally-available equipment-capacity scale-economies.

 

Kaivan Munshi & Mark Rosenzweig, 2016. "Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap," American Economic Review, American Economic Association, vol. 106(1), pages 46-98, January.

 

Abstract: We provide an explanation for the large spatial wage disparities and low male migration in India based on the trade-off between consumption smoothing, provided by caste-based rural insurance networks, and the income gains from migration. Our theory generates two key empirically verified predictions: (i) males in relatively wealthy households within a caste who benefit less from the redistributive (surplus-maximizing) network will be more likely to migrate, and (ii) males in households facing greater rural income risk (who benefit more from the insurance network) migrate less. Structural estimates show that small improvements in formal insurance decrease the spatial misallocation of labor by substantially increasing migration. 

 

Chang-Tai Hsieh, Enrico Moretti (2017). Housing Constraints and Spatial Misallocation. NBER Working Paper No. 21154

 

Abstract: We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.

 

Herkenhoff, Kyle F. & Ohanian, Lee E. & Prescott, Edward C., 2018. "Tarnishing the golden and empire states: Land-use restrictions and the U.S. economic slowdown," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 89-109.

 

Abstract: This paper studies the impact of state-level land-use restrictions on U.S. economic activity, focusing on how these restrictions have depressed macroeconomic activity since 2000. We use a variety of state-level data sources, together with a general equilibrium spatial model of the United States to systematically construct a panel dataset of state-level land-use restrictions between 1950 and 2014. We show that these restrictions have generally tightened over time, particularly in California and New York. We use the model to analyze how these restrictions affect economic activity and the allocation of workers and capital across states. Counterfactual experiments show that deregulating existing urban land from 2014 regulation levels back to 1980 levels would have increased US GDP and productivity roughly to their current trend levels. California, New York, and the Mid-Atlantic region expand the most in these counterfactuals, drawing population out of the South and the Rustbelt. General equilibrium effects, particularly the reallocation of capital across states, account for much of these gains.

 

Donald R. Davis, Jonathan I. Dingel (2014).The Comparative Advantage of Cities. NBER Working Paper No. 20602.

 

Abstract: What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill-abundant and specialize in skill-intensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions.

 

Eeckhout, Jan and Guner, Nezih, Optimal Spatial Taxation: Are Big Cities Too Small? (January 2015). CEPR Discussion Paper No. DP10352. Available at SSRN: https://ssrn.com/abstract=2554426

 

Abstract: We analyze the role of optimal income taxation across different local labor markets. Should labor in large cities be taxed differently than in small cities? We find that a planner who needs to raise revenue and is constrained by free mobility of labor across cities does not choose equal taxes for cities of different sizes. The optimal tax schedule is location specific and tax differences between large and small cities depends on the level of government spending and on the concentration of housing wealth. Our estimates for the US implies higher marginal rates in big cities, but lower than what is observed. Simulating the US economy under the optimal tax schedule, there are large effects on population mobility: the fraction of population in the 5 largest cities grows by 8.0% with 3.5% of the country-wide population moving to bigger cities. The welfare gains however are smaller. Aggregate consumption goes up by 1.53%. This is due to the fact that much of the output gains are spent on the increased costs of housing construction in bigger cities. Aggregate housing consumption goes down by 1.75%.

 

Bryan, Gharad and Morten, Melanie, The Aggregate Productivity Effects of Internal Migration: Evidence from Indonesia (June 2017). NBER Working Paper No. w23540.

 

Abstract: We estimate the aggregate productivity gains from reducing barriers to internal labor migration in Indonesia, accounting for worker selection and spatial differences in human capital. We distinguish between movement costs, which mean workers will only move if they expect higher wages, and amenity differences, which mean some locations must pay more to attract workers. We find modest but important aggregate impacts. We estimate a 22% increase in labor productivity from removing all barriers. Reducing migration costs to the US level, a high mobility benchmark, leads to an 8% productivity boost. These figures hides substantial heterogeneity. The origin population that benefits most sees an 104% increase in average earnings from a complete barrier removal, or a 37% increase from moving to the US benchmark.

 

Melanie Morten (2016). Temporary Migration and Endogenous Risk Sharing in Village India. NBER Working Paper No. 22159.

 

Abstract: When people can self-insure via migration, they may have less need for informal risk sharing. At the same time, informal insurance may reduce the need to migrate. To understand the joint determination of migration and risk sharing I study a dynamic model of risk sharing with limited commitment frictions and endogenous temporary migration. First, I characterize the model. I demonstrate theoretically how migration may decrease risk sharing. I decompose the welfare effect of migration into the change in income and the change in the endogenous structure of insurance. I then show how risk sharing alters the returns to migration. Second, I structurally estimate the model using the new (2001-2004) ICRISAT panel from rural India. The estimation yields: (1) improving access to risk sharing reduces migration by 21 percentage points; (2) reducing the cost of migration reduces risk sharing by 8 percentage points; (3) contrasting endogenous to exogenous risk sharing, the consumption-equivalent gain from reducing migration costs is 18.9 percentage points lower. Third, I introduce a rural employment scheme. The policy reduces migration and decreases risk sharing. The welfare gain of the policy is 55-70% lower after household risk sharing and migration responses are considered

 

Melanie Morten, Jaqueline Oliveira (2017). The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City. Working Paper

 

Abstract: A large body of literature studies how infrastructure facilitates the movement of traded goods. We ask whether infrastructure also facilitates the movement of labor. We use a general equilibrium trade model and rich spatial data to explore the impact of a large plausibly exogenous shock to highways in Brazil on both goods markets and labor markets. We find that the road improvement increased welfare by 15.9%, of which 88% was due to reduced trade costs and 12% to reduced migration costs. Nevertheless, costly migration is responsible for large spatial heterogeneity in the benefits of roads: the interquartile range of welfare improvement is 8%–29%, as opposed to uniform gains with perfect mobility.

 

Alexander Monge-Naranjo, Pedro Cavalcanti Ferreira and Luciene Torres de Mello Pereira (2018). Of Cities and Slums.  Working Paper

 

Abstract: The emergence of slums is a frequent feature of a countryís path toward urbanization, structural transformation, and development. Based on salient micro and macro evidence from Brazilian labor, housing, and education markets, we construct a simple dynamic model to examine the conditions for slums to emerge. We use the model to determine whether slums are barriers or stepping-stones for the ascension of low-skilled households and the development of the country as a whole, exploring the dynamic interaction of slums, housing costs and sectoral productivities with the human capital formation and structural transformation of a country. We calibrate our model to Brazilian data, and use it to conduct counterfactual experiments. We ?nd that cracking down on slums could slow down the acquisition of human capital in the low-end of the distribution, the growth of cities proper (outside slums) and induce even larger slums in the future. We ?nd that the impact of housing costs in the city depends crucially on the human capital distribution of the country. Finally, procuring slum-dwelling children some access to schools in the city would eventually lead to larger cities and smaller slums.

 

Kevin Donovan & Wyatt Brooks, 2017. "Eliminating Uncertainty in Market Access: The Impact of New Bridges in Rural Nicaragua," 2017 Meeting Papers 1607, Society for Economic Dynamics.

 

Abstract: We estimate the impact of new bridges in rural Nicaraguan villages facing seasonal floods that unpredictably eliminate access to outside markets. We collect detailed annual household surveys over three years and conduct weekly telephone followups with a subset of households for sixty-four weeks, both before and after construction. This information is collected in villages where bridges are built, and in comparable villages where no bridge was built for only engineering-related reasons. We find that bridges eliminate uncertainty in market access driven by floods: in absence of a bridge, household income falls significantly during floods. Bridges completely eliminate this effect. Compared to households in villages where no bridges are built, bridges cause substantial reallocation of activities between farming and wage work. There are also significant effects on agricultural choices: increased fertilizer spending, increased yields on farms, and lower crop storage. We develop a model of occupational choice and risky farm investment, and show that these results are a rational response to reduced market income risk from the bridges. We provide evidence that these results are not due to lower trade costs outside of flooding periods, nor due to looser collateral constraints.

 

Treb Allen, David Atkin (2016) Volatility and the Gains from Trade. NBER Working Paper No. 22276.

 

Abstract: By reducing the negative correlation between local prices and productivity shocks, trade liberalization changes the volatility of returns. In this paper, we explore the second moment effects of trade. Using forty years of agricultural micro-data from India, we show that falling trade costs increased farmer's revenue volatility, causing farmers to shift production toward crops with less risky yields. We then characterize how volatility affects farmer's crop allocation using a portfolio choice framework where returns are determined in general equilibrium by a many-location, many-good Ricardian trade model with flexible trade costs. Finally, we structurally estimate the model—recovering farmers' unobserved risk-return preferences from the gradient of the mean-variance frontier at their observed crop choice—to quantify the second moment effects of trade. While the expansion of the Indian highway network would have increased the volatility of farmer's real income had their crop choice remained constant, by changing what they produced farmers were able to avoid this increased volatility and amplify the gains from trade.

 

Diamond, Rebecca. 2016. The Determinants and Welfare Implications of US Workers' Diverging Location Choices by Skill: 1980-2000. American Economic Review, 106 (3): 479-524.

 

Abstract: From 1980 to 2000, the rise in the US college/high school graduate wage gap coincided with increased geographic sorting as college graduates concentrated in high wage, high rent cities. This paper estimates a structural spatial equilibrium model to determine causes and welfare consequences of this increased skill sorting. While local labor demand changes fundamentally caused the increased skill sorting, it was further fueled by endogenous increases in amenities within higher skill cities. Changes in cities' wages, rents, and endogenous amenities increased inequality between high school and college graduates by more than suggested by the increase in the college wage gap alone. 

 

Fabian Eckert, Michael Peters (2018). Spatial Structural Change. Working Paper.

 

Abstract: This paper studies the spatial implications of structural change. The secular decline in spending on agricultural goods hurts workers in rural locations and increases the return to moving towards nonagricultural labor markets. We combine detailed spatial data for the U.S. between 1880 and 2000 with a novel quantitative theory to understand this process and to quantify its macroeconomic implications. We find that spatial reallocation across labor markets accounts for almost none of the aggregate decline in agricultural employment. Despite ample migration, population net flows were only weakly correlated with agricultural specialization. Spatial reallocation nevertheless had important aggregate effects. Without migration income per capita would have been 15% lower and spatial welfare inequality would have been substantially higher, especially among low-skilled, agricultural workers.

 

Martin Fiszbein (2017). Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S. NBER Working Paper No. 23183

 

Abstract: This paper examines the role of agricultural diversity in the process of development. Using data from U.S. counties and exploiting climate-induced variation in agricultural production patterns, I show that mid-19th century agricultural diversity had positive long-run effects on population density and income per capita. Examining the effects on development outcomes over time, I find that early agricultural diversity fostered structural change during the Second Industrial Revolution. Besides stimulating industrialization, agricultural diversity boosted manufacturing diversification, patent activity, and new labor skills, as well as knowledge- and skill-intensive industries. These results are consistent with the hypothesis that diversity spurs the acquisition of new ideas and new skills because of the presence of cross-sector spillovers and complementarities.

 

Petchey, J. (2009). Theoretical Analysis of Equalization and Spatial Location Efficiency. Regional Studies, 43(7), 899-914.

 

Abstract: This paper shows that regional economies, such as federations or unitary countries with sub-national governments, may need a system of optimal inter-regional transfers to correct for various types of externalities related to factor mobility and location decisions. It is then argued that equalization schemes that take account of the differing expenditure and revenue needs of regions create a pattern of inter-regional transfers of income, but that they are inconsistent with what is required for spatial efficiency. Therefore, equalization is incompatible with the efficient spatial allocation of mobile factors of production. It is also shown that regions have an incentive to act strategically over equalization and distort their provision of local public goods.

 

Shiue C H. Human capital and fertility in Chinese clans before modern growth[J]. Journal of Economic Growth, 2017, 22(4):351-396.

 

Abstract: This paper studies the effect of changes in the return to human capital on the fertility–education relationship. The setting is in Anhui Province, China in the thirteenth to twentieth centuries. Over this period, key changes occurred in the civil service examination system, providing a means to test whether incentives for acquiring education influenced fertility decisions. I form an intergenerationally linked dataset from over 43,000 individuals from all social strata to examine the evidence for a child quantity–quality tradeoff. First, as the civil service examination system became more predictable and less discretionary starting in the seventeenth century, raising the return to human capital, I find evidence that households with a lower number of children had a higher chance that one of their sons would participate in the state examinations. This finding is robust to accounting for differences in resources, health, parental human capital, and demographic characteristics. Importantly, the finding is not limited to a small subset of rich households but present in the sample as a whole. Second, the negative relationship between fertility and education disappeared as the lower chance to become an official during the nineteenth century implied a decline in the return to human capital. Taken together, my findings support the hypothesis that fertility choices respond to changes in the return to human capital.

 

Ömer Özak. Distance to the pre-industrial technological frontier and economic development[J]. Journal of Economic Growth, 2018, 23(2):175-221.

 

Abstract: This research explores the effects of distance to the pre-industrial technological frontiers on comparative economic development in the course of human history. It establishes theoretically and empirically that distance to the frontier had a persistent non-monotonic effect on a country’s pre-industrial economic development. In particular, advancing a novel measure of the travel time to the technological frontiers, the analysis establishes a robust persistent U-shaped relation between distance to the frontier and pre-industrial economic development across countries. Moreover, it demonstrates that countries, which throughout the last two millennia were relatively more distant from these frontiers, have higher contemporary levels of innovation and entrepreneurial activity, suggesting that distance from the frontier may have fostered the emergence of a culture conducive to innovation, knowledge creation, and entrepreneurship.

 

Madsen J B, Murtin F. British economic growth since 1270: the role of education[J]. Journal of Economic Growth, 2017, 22(3):229-272.

 

Abstract: This paper constructs an original database on physical capital, labor, education, GDP, innovations, technology spillovers, and institutions to analyze the proximate determinants of British economic growth since 1270. Several approaches are taken in the paper to tackle endogeneity. We show that education has been the most important driver of income growth during the period 1270–2010, followed by knowledge stock and fixed capital, while institutions have not been robust determinants of growth. The contribution of education has been equally important before and after the first Industrial Revolution. Overall, the results give strong support to the predictions of Unified Growth Theories.

 

Yagan, D. (2017). Employment hysteresis from the great recession. Nber Working Papers.

 

Abstract: This paper uses U.S. local areas as a laboratory to test whether the Great Recession depressed 2015 employment. In full-population longitudinal data, I find that exposure to a 1-percentage-point-larger 2007-2009 local unemployment shock caused working-age individuals to be 0.4 percentage points less likely to be employed at all in 2015, evidently via labor force exit. These shocks also increased 2015 income inequality. General human capital decay and persistently low labor demand each rationalize the findings better than lost job-specific rents, lost firm-specific human capital, or reduced migration. Simple extrapolation suggests the recession caused most of the 2007-2015 age-adjusted employment decline.

 

Jedwab R., Vollrath D. (2019).The Urban Mortality Transition and Poor-Country Urbanization. American Economic Review

 

Abstract: Today the world's fastest-growing cities lie in low-income countries, unlike the historical norm. Also unlike the "killer cities" of history, cities in low-income countries grow not just through in-migration but also through their own natural increase. First, we use novel historical data to document that many poor countries urbanized at the same time as the postwar urban mortality transition. Second, we develop a framework incorporating location choice with heterogeneity in demographics and congestion costs across locations to account for this. In the framework, people prefer to live in low-mortality locations, and the aggregate rate of population growth and the locational choice of individuals interact. Third, we calibrate this to data from a sample of poor countries, and find that informal urban areas (e.g. slums) can absorb additional population more easily than other locations. We show that between 1950 and 2005 the urban mortality transition could have doubled the urbanization rate as well as the size of informal urban areas in this sample. Of these effects, one-third could be attributed to the amenity effect of lower urban mortality rates, while the remainder is due to higher population growth disproportionately pushing people into informal urban areas. Fourth, simulations suggest that family planning programs, as well as industrialization or urban infrastructure and institutions may be effective in slowing poor-country urbanization.