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  4. January 2019
  5. A Spatial Knowledge Economy

A Spatial Knowledge Economy

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Abstract

Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. The model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities and how variation in these premia emerges from symmetric fundamentals.

Citation

Davis, Donald R., and Jonathan I. Dingel. 2019. "A Spatial Knowledge Economy." American Economic Review, 109 (1): 153-70. DOI: 10.1257/aer.20130249

Additional Materials

JEL Classification

  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials
  • O31 Innovation and Invention: Processes and Incentives
  • R12 Size and Spatial Distributions of Regional Economic Activity
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics