ESTIMATING A DYNAMIC SPATIAL EQUILIBRIUM MODEL TO EVALUATE THE WELFARE IMPLICATIONS OF REGIONAL ADJUSTMENT PROCESSES: THE DECLINE OF THE RUST BELT

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This article develops and estimates a new dynamic spatial equilibrium model to study the regional transition dynamics and its impact on individual and aggregate welfare. The model consists of a multiregion, multisector economy comprised of overlapping generations of individuals with heterogeneous skills and mobility costs. The empirical findings suggest that a large fraction of the decline of the Rust Belt can be attributed to the reduction in its region-specific comparative advantage in the goods-producing sector. This decline generated significant differences in welfare across regions. Policy experiments show that such inequality can be significantly reduced through place-based policies.
Publisher
WILEY
Issue Date
2017-05
Language
English
Article Type
Article
Keywords

LABOR-MARKET; RESIDENTIAL LAND; DISCRETE-CHOICE; UNITED-STATES; GROWTH; WAGE; US; LIBERALIZATION; HETEROGENEITY; DECISIONS

Citation

INTERNATIONAL ECONOMIC REVIEW, v.58, no.2, pp.473 - 497

ISSN
0020-6598
DOI
10.1111/iere.12224
URI
http://hdl.handle.net/10203/244599
Appears in Collection
MT-Journal Papers(저널논문)
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