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Coen Teulings (University of CAMBRIDGE) – “Agglomeration and Sorting”, joint work with Yujiang Chenn
September 21, 2:00 pm - 3:30 pm
The Malinvaud Seminar: Every Thursday at 2:00 pm.
Time: 2:00 pm – 3:30 pm
Date: 21th of September 2017
Place: Room 3001
Coen TEULINGS (University of CAMBRIDGE) – “Agglomeration and Sorting”, joint work with Yujiang Chenn
Abstract: Recent papers suggest a strong interaction between agglomeration externalities and human capital. We analyse a Mincerian wage equation with regional fixed effects and variation in the return to human capital, using data on 47 states and 34 metropolitan areas for the US. Agglomeration externalities are strongly related to the occupational structure. We show that regional difference in house prices offset these externalities. We develop a multi-region model with regional heterogeneity in workers and jobs, tradable versus non-tradable (land) commodities, consumption amenities, regional house prices, non-homothetic utility, and interregional labour mobility. The model allows for two forms of spatial organization: cities and rural areas. The model fits the regional data on the fixed wage effects, the return and mean level of human capital, land prices, and the city-rural area distinction well. The contribution of agglomeration externalities to GDP capitalizes in land values. We use these land values to calculate the value of agglomeration.