A Quantitative Assessment of the Role of Agglomeration Economies in the Spatial Concentration of U.S. Employment

35 Pages Posted: 19 Nov 2006

Date Written: November 2006

Abstract

This paper seeks to quantify the contribution of agglomeration economies to the spatial concentration of U.S. employment. A spatial macroeconomic model with heterogeneous localities and agglomeration economies is developed and calibrated to U.S. data on the spatial distribution of employment. The model is used to answer the question: By how much would the spatial concentration of employment decline if agglomeration economies were counterfactually suppressed? For the most plausible calibration, the answer is about 48 percent. More generally, the general equilibrium contribution of agglomeration economies appears to be substantial, with empirically defensible calibrations yielding estimates between 40 and 60 percent.

Keywords: Agglomeration economies, Employment

Suggested Citation

Chatterjee, Satyajit, A Quantitative Assessment of the Role of Agglomeration Economies in the Spatial Concentration of U.S. Employment (November 2006). FRB of Philadelphia Working Paper No. 06-20. Available at SSRN: https://ssrn.com/abstract=944907 or http://dx.doi.org/10.2139/ssrn.944907

Satyajit Chatterjee (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-3861 (Phone)
215-574-4364 (Fax)

HOME PAGE: http://sites.google.com/site/chatterjeesatyajit/home

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