Trade and Urbanization: Evidence from Hungary
- (pp. 733-90)
(Complimentary)
Abstract
I study how trade affects urbanization and real income. To this end, I exploit large-scale exogenous changes in trade stemming from the redrawing of Hungary's borders after the First World War. I show that urbanization in counties near the new border decreased significantly relative to counties farther away. I rationalize this reduced-form finding in a spatial model in which benefits from trading drive agglomeration around locations where trading activity takes place. Structurally estimating the model, I find a 15.55 percent decrease in Hungarian residents' average real income after the redrawing of borders, with the largest losses concentrated in border regions.Citation
Nagy, Dávid Krisztián. 2022. "Trade and Urbanization: Evidence from Hungary." American Economic Journal: Microeconomics, 14 (3): 733-90. DOI: 10.1257/mic.20180270Additional Materials
JEL Classification
- F11 Neoclassical Models of Trade
- F14 Empirical Studies of Trade
- N34 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: 1913-
- N74 Economic History: Transport, Trade, Energy, Technology, and Other Services: Europe: 1913-
- N94 Regional and Urban History: Europe: 1913-
- R12 Size and Spatial Distributions of Regional Economic Activity
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