THE OPTIMAL DISTANCE TO PORT FOR EXPORTING FIRMS*

ABSTRACT Success in international trade depends, among other things, on distance from markets. Most new economic geography models focus on the distance between countries. In contrast, much less theorizing and empirical analysis have focused on how distances within a country—for instance, due to the location behavior of exporting firms—matter to international trade. In this paper, we contribute to the literature on the latter by offering a theoretical model to explain the optimal distance that an export‐oriented firm would locate from a port. We present empirical evidence in support of the model.     

HUMAN CAPITAL LOCATION CHOICE: ACCOUNTING FOR AMENITIES AND THICK LABOR MARKETS*

ABSTRACT A growing literature has found a positive association between human capital and long‐run employment growth across cities. These studies have increased interest in understanding the location choices of university degree holders, a group often used as a proxy measure of human capital. Based on data from the 2001 Canadian Census of Population, this paper investigates determinants of the location choices of degree and nondegree holders. With a multinomial logit model, it tests a series of hypotheses about the differential effects of thick labor markets and amenities on the location choice of these groups across metropolitan and nonmetropolitan areas in Canada.     

SPATIAL HEDONICS AND THE WILLINGNESS TO PAY FOR RESIDENTIAL AMENITIES*

ABSTRACT We investigate the role of spatial multipliers when using spatial‐lag hedonic models to measure the benefits of residential amenity improvements. Such benefits are commonly measured using the product of the coefficient of the amenity in question and a spatial multiplier. We show this is correct only when the spatial spillovers transmitted through the multiplier are strictly technological. If they are instead strictly pecuniary, then benefits are fully measured using the coefficient with no spatial multiplier. In either case, or in intermediate cases where both types of spillovers exist, a spatial‐lag specification is required to obtain valid benefits measures.     

ON THE IMPACT OF LABOR MARKET MATCHING ON REGIONAL DISPARITIES*

ABSTRACT We propose a model where imperfect matching between firms and workers on local labor markets leads to incentives for spatial agglomeration. We show that the occurrence of spatial agglomeration depends on initial size differences in terms of both number of workers and firms. Allowing for dynamics of workers' and firms' location choices, we show that the spatial outcome depends crucially on different dimensions of agents' mobility. The effect of a higher level of human capital on regional disparities depends on whether it makes workers more mobile or more specialized on the labor market.     

STEADY-STATE LABOR TURNOVER AS OPTIMAL HOUSEHOLD BEHAVIOR*

ABSTRACT. Models of the firm with costly labor turnover and models of migration with location-specific consumption amenities are two standard explanations of the co-existence of persistent wage differentials with extensive labor mobility. Labor turnover models postulate a worker quit function where the quit rate is inversely related to the regional wage differential in the steady state. We use amenity-consumption models of migration to show conditions under which this postulate is consistent with household utility maximization. Our model extends standard amenity-consumption analysis by making the value of amenities contingent on the “state” of the household. These household states are defined in terms of demographic, education, and health characteristics and are assumed to follow a Markov process.     

ECONOMETRIC MODELING OF INTERREGIONAL LABOR MARKET LINKAGES*

ABSTRACT. This paper presents a statistical procedure for empirically establishing linkages between regional economies. Using Granger's definition of causality and the final prediction error technique for lag-length specification suggested by Hsiao, a linked, multiregional employment model is developed. The forecast performance of the linked model is compared to models which do not include interregional linkages. It is shown that forecast error is reduced by taking into account employment interrelationships between regions.     

THE SOCIAL BENEFITS OF URBAN CULTURAL AMENITIES*

ABSTRACT. This paper uses a two-stage hedonic wage approach to derive the benefits from improvement of five cultural amenities. It is argued that the hedonic approach permits valuation of both private and local public aspects of cultural goods since access to the amenity is an essential input in the production of the final service flow. Empirical estimates of willingness to pay suggest price and income elasticities are approximately unity. Lower-bound estimates of marginal benefits for a representative city range from $0.85 million for an additional theater to $57.9 million for an additional zoo facility.     

SOMETIMES CLOSE IS GOOD ENOUGH: THE VALUE OF NEARBY ENVIRONMENTAL AMENITIES*

ABSTRACT An extensive empirical literature exists, showing that variations in region‐specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only amenities in the same location as the household. This paper argues that environmental amenities at some distance from but accessible to urban areas may lead to negative compensating wage differentials. We use a general equilibrium framework and data from the 1995 Current Population Survey to calculate implicit amenity prices based on measures of distance to environmental amenities. Our results suggest that amenities outside the metropolitan area do generate compensating wage differentials, as workers are willing to accept lower wages to live in accessible proximity to “nice” places. This implies that these places provide a positive externality to those communities that find them accessible. The estimated effects are quantitatively important, suggesting that these externalities should be taken into account in policy making.     

THE EFFECT OF URBANIZATION ON LABOR TURNOVER*

ABSTRACT The paper empirically examines labor market matching as a source of urban agglomeration economies. We work from the hypothesis that job turnover leads to tighter labor matches and estimate the relationship between urbanization and the job mobility of young men. Using a panel from the National Longitudinal Survey of Youth, we find evidence that young men change jobs more frequently in their early career if they live in larger or in more educated urban areas. The sensitivity of the results to whether the young men were “movers” or “stayers” suggests the possible endogeneity of location.     

A CRITIQUE OF CONVENTIONAL EXPLANATION OF LABOR MARKET,CONDITIONS FOR EMPLOYED BLACKS*

Historically, the pattern of black employment has differed considerably from the pattern of white employment. In addition, the U.S. economy has undergone structural changes such that service sector employment has increased at a faster pace than has employment in other sectors. While employed blacks have made some occupational advances in non-service areas (e.g., manufacturing), the employed work force is heavily concentrated in low wage occupations in the service sector. Neo-classical analyses of the pattern of black employment do not consider the significance of these structural changes. Segmentation theorists do consider these changes but downgrade the importance of the service sector. This paper draws attention to the overwhelming importance of the service sector in explaining the structure of black employment in the last twenty years.     

THE OPTIMAL CONVERGENCE OF REGIONAL INCOMES*

For many policy considerations it is assumed that the convergence of regional mean income will improve national equity by reducing overall inequality. The literature on decomposability of social welfare functions implies that this assumption is unwarranted. This paper develops a notion of optimal regional convergence. In general, the point of optimal convergence depends on the shapes of the regional income distributions, the inequality index used, and the rule for distributing interregional transfers. These concepts are illustrated with data on the regional income distributions of the Southern and Northern United States.     

MEASURING CONTRIBUTING FACTORS TO INTERREGIONAL AGRICULTURAL LABOR PRODUCTIVITY DIFFERENTIALS: A JOINT PROFIT FORMULATION*

ABSTRACT Using Taylor series approximations of joint profit functions, a methodology is outlined to quantify interregional differentials in the Canadian agriculture sector by region and to quantify the contributing factors to regional labor productivity differences. These contributing factors are output price differentials–both crop and livestock, differentials in “land and buildings” capital deepening, “other” capital deepening, energy prices, other material prices, and efficiency. The joint profit formulation permits the analysis of effects of regional specific output price and output mix differentials.     

THE JOURNEY-TO-WORK DISTANCE IN RELATION TO THE SOCIO-ECONOMIC CHARACTERISTICS OF WORKERS

The aim of this paper has been to explore the variation in the distance between the residence and work locations of industrial workers. This distance has been theoretically and empirically related to the income, number of dependents, marital status, sex, and age of workers whose job site was located in the centre of the city. A multiple regression model has shown the over-all importance of the budget constraint as a factor in the residential location decision relative to the job site. Of the variables included in the analysis, the wage rate of the worker is the strongest determinant of the location decision. Although workers who have the same budget constraint show weak locational relationships with the job site relative to the number of dependents and marital status, as suggested by the model, the only strong difference in spatial location occurs when the budget constraint is allowed to vary. Once workers have the means to increase their over-all utility level, they do trade off journey-to-work disutilities for residential facilities farther from the central city job site. But the social conditions of the worker tend to influence the residence-to-work distance only slightly when considered apart from the influence they may have on the wage rate. The over-all dependence of the journey-to-work distance on these variables in this setting hence was small, reaching an R value of only 0.38.     

THE ECONOMIC LAW OF MARKET AREAS: A FURTHER DISCUSSION*

ABSTRACT. The Economic Law of Market Areas, so named by Fetter, is concerned with the division of a territory between two competing centers. It is argued that this Law can be conveniently examined in terms of six cases, each of which is specified by a combination of differentials in freight rates and prices at the two centers. The locational significance of each case is considered, along with the form and dimensions of the market-area boundary between the two centers. Three of the cases are each shown to subsume a special case. It is further shown that for any case except one, a reversal of the differentials between the two centers, while resulting in a symmetrically-equivalent outcome, requires a different (and usually substantial) respecification of the case.     

MARKET CAPTURE BY TWO COMPETITORS: THE PREEMPTIVE LOCATION PROBLEM*

ABSTRACT. We consider a location and allocation game for two competitor firms, A and B, that each seek to locate p facilities in a network. A market is captured by a particular firm if that market's closest facility belongs to that firm rather than a competitor. The question is as follows: Firm A wants to locate its p facilities so that B, which enters also with p facilities after Firm A has located its facilities, will capture the minimum market value possible. That is, Firm A wishes to preempt Firm B in its bid to capture market share to the maximum extent possible. A model is presented that addresses this issue, together with solution methods and computing times.