Market Access and the Concentration of Economic Activity in a System of Declining Cities

  • Luis Eduardo Quintero Johns Hopkins University
  • Paula Restrepo The World Bank

Abstract

While the positive effect of market access (MA) on population and economic growth has shown to be robust, the results in the literature were obtained in a context of population growth. This article examines the impact that MA has on a system of cities that has suffered a negative population shock. An extended version of the Brezis and Krugman (1997) model of life cycle of cities predicts that a system of cities experiencing population loss will see a relative reorganization of its population from small to larger cities, increasing population concentration. Accordingly, cities with higher MA will lose relatively more. We confirm these predictions using multiple definitions of MA with a comprehensive sample of cities in Eastern Europe and Central Asia, a region with declining population growth since 1990.

References

Addario, Sabrina Di and Eleonora Patacchini, “Wages and the city. Evidence from Italy,” Labour Economics, 2008, 15 (5), 1040–1061.

Amiti, Mary and Lisa Cameron, “Economic geography and wages,” The Review of

Economics and Statistics, 2007, 89 (1), 15–29.

Anderson, James E, “A theoretical foundation for the gravity equation,” The American

Economic Review, 1979, 69 (1), 106–116.

Au, Chun-Chung and J Vernon Henderson, “Are Chinese cities too small?,” The

Review of Economic Studies, 2006, 73 (3), 549–576.

Bosker, Maarten, Steven Brakman, Harry Garretsen, and Marc Schramm, “Adding geography to the new economic geography: bridging the gap between theory and empirics,” Journal of Economic Geography, 2010, 10 (6), 793–823.

Brakman, Steven, Harry Garretsen, and Marc Schramm, “Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions,” Regional Science and Urban Economics, 2006, 36 (5), 613–635.

Breinlich, Holger, “The spatial income structure in the European Union—what role for Economic Geography?,” Journal of Economic Geography, 2006, 6 (5), 593–617.

Brezis, Elise S and Paul R Krugman, “Technology and the life cycle of cities,” Journal of Economic Growth, 1997, 2 (4), 369–383.

Brueckner, Jan K, “Urban growth models with durable housing: An overview,” Economics of Cities: Theoretical Perspectives, 2000, pp. 263–289.

Combes, Pierre-Philippe and Laurent Gobillon, The Empirics of Agglomeration Economies, handbook of regional and urban economics ed., Elsevier, 2015.

Combes, Pierre-Philippe, Gilles Duranton, and Laurent Gobillon, “Spatial wage disparities: Sorting mat- ters!,” Journal of Urban Economics, 2008, 63 (2), 723–742.

Combes, Pierre-Philippe, Gilles Duranton, Laurent Gobillon, and S ebastien Roux, Estimating agglomeration economies with history, geol- ogy, and worker effects, University of Chicago Press,

Duranton, Gilles, “Agglomeration effects in Colombia,” Journal of Regional Science, 2016, 56 (2), 210–238.

Fallah, Belal N, Mark D Partridge, and M Rose Olfert, “New economic geography and US metropolitan wage inequality,” Journal of Economic Geography, 2010, 11 (5), 865–895.

Fally, Thibault, Rodrigo Paillacar, and Cristina Terra, “Economic geography and wages in Brazil: Evidence from micro-data,” Journal of Development Economics, 2010, 91 (1), 155–168.

Fujita, Masahisa, Paul R Krugman, Anthony J Venables, and Massahisa Fu- jita, The spatial economy: cities, regions and international trade, Vol. 213, Wiley Online Library, 1999.

Gendron-Carrier, Nicolas, Marco Gonzalez-Navarro, Stefano Polloni, and Matthew A Turner, “Subways and urban air pollution,” 2017.

Glaeser, Edward L and Joseph Gyourko, “Urban decline and durable housing,” Journal of political economy, 2005, 113 (2), 345–375.

Greenstone, Michael, Richard Hornbeck, and Enrico Moretti, “Identifying agglomeration spillovers: Evidence from winners and losers of large plant openings,” Journal of Political Economy, 2010, 118 (3), 536–598.

Harris, Chauncy D, “The Market as a Factor in the Localization of Industry in the United States,” Annals of the association of American geographers, 1954, 44 (4), 315–348.

Harris, John R and Michael P Todaro, “Migration, unemployment and development: a two-sector analysis,” The American economic review, 1970, 60 (1), 126–142.

Head, Keith and Thierry Mayer, “The empirics of agglomeration and trade,” Handbook of regional and urban economics, 2004, 4, 2609–2669.

and , “Regional wage and employment responses to market potential in the EU,” Regional Science and Urban Economics, 2006, 36 (5), 573–594.

Henderson, J Vernon and Hyoung Gun Wang, “Urbanization and city growth: The role of institutions,” Regional Science and Urban Economics, 2007, 37 (3), 283–313.

Henderson, V, A. Storeygard, and D. Weil, “A Bright Idea for Measuring Economic Growth,” American Economic Review: Papers and Proceedings, 2011, 101 (3), 194–199.

Henderson, V, A. Storeygard, and D. Weil, “Measuring Economic Growth from Outer Spaces,” American Economic Review, 2012, 102 (2), 994–1028.

Holl, Adelheid, “Market potential and firm-level productivity in Spain,” Journal of Economic Geography, 2011, 12 (6), 1191–1215.

Lall, Somik V, Zmarak Shalizi, and Uwe Deichmann, “Agglomeration economies and productivity in Indian industry,” Journal of Development Economics, 2004, 73 (2), 643–673.

Lewer, Joshua J and Hendrik Van den Berg, “A gravity model of immigration,” Economics letters, 2008, 99 (1), 164–167.

Overman, Henry G, Stephen J Redding, and Anthony J Venables, “The economic geography of trade production and income: a survey of empirics,” 2001.

Quintero, Luis and Mark Roberts, “The Value of Urban Locations: Location Wage Premia in Latin America and the Caribbean,” July 2017.

Quintero, Luis and Paula Restrepo, “City Decline in an Urbanizing World,” August 2017.

Redding, Stephen J. and Daniel M. Sturm, “The Costs of Remoteness: Evidence from German Division and Reunification,” The American Economic Review, 2008, 98 (5), 1766–1797.

Rice, Patricia, Anthony J Venables, and Eleonora Patacchini, “Spatial determinants of productivity: analysis for the regions of Great Britain,” Regional Science and Urban Economics, 2006, 36 (6), 727–752.

Roberts, M., B. Stewart, M. Prakash, and K. McWilliams, Global Night Time Lights Urban Extents and Growth Patterns Product. Alpha Version World Bank 2015.

Rosenthal, Stuart S and William C Strange, “The attenuation of human capital spillovers,” Journal of Urban Economics, 2008, 64 (2), 373–389.

Thomas, CM and WE Featherstone, “Validation of Vincenty’s formulas for the geodesic using a new fourth-order extension of Kivioja’s formula,” Journal of Surveying engineering, 2005, 131 (1), 20–26.

Vincenty, Thaddeus, “Direct and inverse solutions of geodesics on the ellipsoid with ap- plication of nested equations,” Survey review, 1975, 23 (176), 88–93.

Yoon, Chamna, “Estimating a Dynamic Spatial Equilibrium Model to Evaluate the Welfare Implications of Regional Adjustment Processes: The Decline of the Rust Belt,” International Economic Review, 2017, 58 (2), 473–497.

Published
2018-12-28
How to Cite
Quintero, L. E. and Restrepo, P. (2018) “Market Access and the Concentration of Economic Activity in a System of Declining Cities”, REGION, 5(3), pp. 97-109. doi: 10.18335/region.v5i3.223.
Section
Articles
Share