The Size of U.S. Metropolitan Areas
Metropolitan areas—unions of nearby built-up locations within which people travel on a day-to-day basis among places of residence, employment, and consumption—serve as a fundamental unit of economic analysis. But existing delineations of U.S. metro areas—including metropolitan Core-Based Statistical Areas (CBSAs), Urbanized Areas, and Commuting Zones—stray far from this conception. We develop a flexible algorithm that uses commuting flows among U.S. census tracts in 2000 to match varied interpretations of our metropolitan conception. Under a baseline parameterization that balances ...
How does labor mobility affect income convergence?
The neoclassical growth model is extended to allow for mobile labor. Following a negative shock to a small economy's capital stock, capital and labor frictions effect an equilibrium transition path during which wages remain below their steady-state level. Outmigration directly contributes to faster income convergence but also creates a disincentive for gross capital formation. The net result is that across a wide range of calibrations, the speed of income convergence is relatively insensitive to the degree of labor mobility.
A bottleneck capital model of development
A convex marginal adjustment cost allows the neoclassical growth model to match observed transition paths for output growth, savings, investment, the real interest rate, and the shadow value of installed capital. Such an adjustment cost need apply only to one of two complementary capital inputs with minimal factor income share. The interaction of complementary capital inputs blurs the distinction between capital accumulation and productivity growth.
A productivity model of city crowdedness
Population density varies widely across U.S. cities. A simple, static general equilibrium model suggests that moderate-sized differences in cities? total factor productivity can account for such variation. Nevertheless, the productivity required to sustain above-average population densities considerably exceeds estimates of the increase in productivity caused by such high density. In contrast, increasing returns to scale may be able to sustain multiple equilibria at below-average population densities.
A simple model of city crowdedness
Population density varies widely across U.S. cities. A calibrated general equilibrium model in which productivity and quality-of-life differ across locations can account for such variation. Individuals derive utility from consumption of a traded good, a nontraded good, leisure, and quality-of-life. The traded and nontraded goods are produced by combining mobile labor, mobile capital, and non-mobile land. An eight-fold increase in population density requires an approximate 50 percent productivity differential or an approximate 20 percent compensating differential. A thirty-two-fold increase in ...
Why does unemployment differ persistently across metro areas?
Unemployment rates differ widely and persistently across U.S. metro areas. Metros that have experienced high or low unemployment rates in one year have tended to stay that way 10 years and even 20 years later. ; Such variation and persistence raises questions: Why don?t households move from high long-term unemployment metros to low long-term unemployment metros? Why don?t firms in need of workers move from low long-term unemployment metros to high long-term unemployment metros? ; Although such moves may seem sensible, Rappaport finds that a number of factors?a mismatch of worker skills to ...
The Faster Growth of Larger, Less Crowded Locations
Over the past few decades, the population and employment growth of small and large locations in the United States have diverged. Many smaller cities and rural areas saw declining population and employment from 2000 to 2017 as residents and jobs migrated to larger, more prosperous locations. This migration might suggest that the benefits of size, such as business productivity and urban amenities, have become greater over time. However, the migration might also reflect other factors, such as the disproportionate specialization of smaller locations in the declining manufacturing and agriculture ...
The effectiveness of homeownership in building household wealth
The recent economic and financial crisis and the current slow recovery highlight that homeownership plays a critical role in the U.S. economy. The estimated ?equivalent rent? implicitly paid by homeowners accounts for more than 8 percent of gross domestic product. Investment in single-family housing also represents a significant share of GDP and is closely tied to the business cycle. During the past decade, such investment has ranged from as little as 1.3 percent of GDP during recessions to as much as 3.4 percent during expansions. The associated large fluctuations in demand for ...