Testing Nonlinear New Economic Geography Models

Eckhardt Bode and Jan Mutl

No 253, Economics Series from Institute for Advanced Studies

Abstract: We test a New Economic Geography (NEG) model for U.S. counties, employing a new strategy that allows us to bring the full NEG model to the data, and to assess selected elements of this model separately. We find no empirical support for the full NEG model. Regional wages in the U.S. do not respond to local wage shocks in the way predicted by the model. We show that the main reason for this is that the model does not predict either the migration patterns induced by local wage shocks or the repercussions of this migration for regional wages correctly.

Keywords: New economic geography; spatial econometrics (search for similar items in EconPapers)
JEL-codes: C21 C51 R12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-07
New Economics Papers: this item is included in nep-geo and nep-ure
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://irihs.ihs.ac.at/id/eprint/2002 First version, 2010 (application/pdf)

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Working Paper: Testing Nonlinear New Economic Geography Models (2010)
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