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  4. Spring 2023
  5. Economic Activity across Space: A Supply and Demand Approach

Economic Activity across Space: A Supply and Demand Approach

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Abstract

What do recent advances in economic geography teach us about the spatial distribution of economic activity? We show that the equilibrium distribution of economic activity can be determined simply by the intersection of labor supply and demand curves. We discuss how to estimate these curves and highlight the importance of global geography—the connections between locations through the trading network—in determining how various policy relevant changes to geography shape the spatial economy.

Citation

Allen, Treb, and Costas Arkolakis. 2023. "Economic Activity across Space: A Supply and Demand Approach." Journal of Economic Perspectives, 37 (2): 3-28. DOI: 10.1257/jep.37.2.3

Additional Materials

JEL Classification

  • C51 Model Construction and Estimation
  • F16 Trade and Labor Market Interactions
  • J22 Time Allocation and Labor Supply
  • J23 Labor Demand
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • 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
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