What are Falling Transport Costs Doing to Spatial Concentration Across Us Counties?

34 Pages Posted: 30 May 2003

See all articles by Klaus Desmet

Klaus Desmet

Southern Methodist University (SMU); Centre for Economic Policy Research (CEPR)

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Date Written: March 2003

Abstract

Theory is divided on whether falling transport costs lead to more or less spatial concentration of economic activity. Using US county-level data we find that aggregate employment became more concentrated between 1972-92. This aggregate picture hides important differences between sectors though. Whereas non-service sectors have been spreading out, service sectors have become increasingly concentrated by absorbing jobs from nearby areas. This cross-sectional variation lends support to Krugman and Venables (1995), who suggest that falling transport costs initially lead to more concentration, and later on to more dispersion.

Keywords: Spatial concentration, transport costs, US counties, location

JEL Classification: R11, R12

Suggested Citation

Desmet, Klaus and Fafchamps, Marcel, What are Falling Transport Costs Doing to Spatial Concentration Across Us Counties? (March 2003). CEPR Discussion Paper No. 3853. Available at SSRN: https://ssrn.com/abstract=412040

Klaus Desmet (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

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