Specializing in Cities: Density and the Pattern of Trade

46 Pages Posted: 21 Nov 2022

See all articles by Antoine Levy

Antoine Levy

International Monetary Fund (IMF)

Jacob Moscona

Harvard University; Harvard University

Date Written: October 26, 2022

Abstract

Variation in urban density is a core determinant of patterns of productivity within countries, but does it also shape patterns of trade across countries? We develop a strategy to estimate the extent to which local population density boosts productivity in each industry. Combining these industry-level estimates with fine-grained global population data, we show that both US states and countries with more spatially concentrated ("denser'') populations disproportionately export in density-loving sectors. The estimates are similar using an instrumental variables strategy that exploits countries' historical population distributions, and are driven by variation across sectors in the importance of R&D and collaborative/interactive tasks in production. We rationalize these findings with a model in which national export specialization emerges endogenously from the distribution of factors within countries, and show how location-level data can be aggregated to measure country-level specialization.

Keywords: Density, cities, trade, comparative advantage

JEL Classification: F14, F16, R12, R13

Suggested Citation

Levy, Antoine and Moscona, Jacob, Specializing in Cities: Density and the Pattern of Trade (October 26, 2022). Available at SSRN: https://ssrn.com/abstract=4259355 or http://dx.doi.org/10.2139/ssrn.4259355

Antoine Levy

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jacob Moscona (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Harvard University ( email )

HOME PAGE: http://https://scholar.harvard.edu/moscona

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