Industry location and wages: The role of market size and accessibility in trading networks

José Zofío, Kristian Behrens () and Javier Barbero

No 10411, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the geographical distribution of economic activity and wages in a general equilibrium model with many asymmetric regions and costly trade. As shown by extensive simulations on random networks, local market size better explains a region?s industry share, whereas accessibility better explains a region?s wage. The correlation between equilibrium wages and industry shares is low, thus suggesting that the two variables operate largely independently. The model replicates well the spatial distribution of industry using Spanish data, yet overpredict changes in that distribution due to changes in 'generalized transport costs'. The latter had only small impacts on changes in the geographical distribution of economic activity in Spain from 1980 to 2007.

Keywords: Size; Industry location; Trading networks; Wages; Generalized transport costs (search for similar items in EconPapers)
JEL-codes: C63 F12 R12 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Industry location and wages: The role of market size and accessibility in trading networks (2018)
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