A theory of industry location and residence choice (original) (raw)
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Residential Choice, Mobility, and the Labor Market
Journal of Urban Economics, 2002
There is substantial evidence suggesting that the process of suburbanization creates new job opportunities that are not equally exploited by all workers. In order to explain this phenomenon, a simple model is developed which incorporates borrowing constraints as an important restriction on moving decisions, obstructing the necessary labor flows between jurisdictions required to equalize (net) wages. In essence, people who cannot borrow will be restricted in terms of their capability of changing residence location and therefore will have limited possibilities of working in distant labor markets, or they will be subject to excessive commuting. Furthermore, the labor allocation induced by households' behavior facing these constraints affects consumer welfare, production, and producers' profits. The outcomes with perfect credit markets and with borrowing restrictions are calculated and the economic welfare levels are compared. As wages are flexible, they adjust to reflect the relative scarcity of workers present in each jurisdiction. Consequently, some of the negative effects of the borrowing constraints are compensated, so the outcomes cannot be easily compared. Some numerical examples are constructed to have an idea of the possible outcomes under different conditions. Finally, it is found that allowing for moving cost deductions from taxable income may help to alleviate the problem. © 2002 Elsevier Science (USA) I thank Jan K. Brueckner for his valuable help and support at various points of this research. I also thank two anonymous referees for providing helpful comments.
A simple theory of industry location and residence choice
Journal of Economic Geography, 2010
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The impact of pollution on the dynamics of industry location and residence choice
Annals of Operations Research
In this paper we analyze the role of pollution for industry location and residence choice. We present a new economic geography (NEG) model in which manufacturing generates local pollution (that does not accumulate) and uses two types of labour input: unskilled workers that cannot migrate and work where they live; and high-skilled entrepreneurs that choose where to produce and where to live. Taking on board costless commuting or, in alternative, distance working, entrepreneurs can live in a different location from production. Both types of households enjoy utility from consuming all commodities (locally and imported variants) and suffer from local pollution. The resulting model is of the footloose entrepreneur variant, but involves two dynamic equations: the standard one governing the residential choice of entrepreneurs, and another one governing where production is located. The current paper analyses the discrete time dynamic process defined by a two-dimensional piecewise smooth map...
Spatial agent-based modeling of household and firm location with endogenous transport costs
NETNOMICS: Economic Research and Electronic Networking, 2011
The paper describes a spatial economic agent-based model (ABM), consistent with the principles of new economic geography (NEG), which allows the discrete-time evolutionary simulation of complex interactions of household and firm location choices. In contrast with the current ABM approaches, it considers a multi-regional (multi-urban) setting to enable a more realistic representation of decisions related to commuting, migration and firm (re)location. The model allows simulating spatially differentiated, multi-commodity markets for land and labor in a system of cities and the behavior of profit-maximizing firms with multi-regional asset investment decisions, incorporating endogenous transport costs with congestion effects. It also accounts for the impact of agglomeration forces on industrial location choices and the formation of urban development patterns. The conceptual framework and main components of the spatial ABM are presented and several implementation issues are discussed with regard to possible casespecific applications and policy scenarios.
An integrated model of residential and employment location in a metropolitan region
Papers in Regional Science, 1991
The purpose of this paper is to improve the tools available for analyzing and evaluating land-use and transport policies in a regional planning context. A normative residential location submodel is combined with a predictive submodel for the location of employment. The demand side of the residential location submodel is formulated as a nested multinomial logit model of the joint choice of residential location and transportation mode. The cost of commuting is assumed to be a major determinant of locational choice. The employment location submodel is based on the assumption that accessibility to the labor force is the strategic location factor. Two versions of the submodels are proposed corresponding to a post-and pre-distribution modal split in the familiar four-step transport model. Policy tests of a newly proposed, large-scale traffic investment program in the Stockholm region are reported.
2011
Abstract The paper describes a spatial economic agent-based model (ABM), consistent with the principles of new economic geography (NEG), which allows the discrete-time evolutionary simulation of complex interactions of household and firm location choices. In contrast with the current ABM approaches, it considers a multi-regional (multi-urban) setting to enable a more realistic representation of decisions related to commuting, migration and firm location.
Source Versus Residence: A Comparison from a New Economic Geography Perspective
SSRN Electronic Journal, 2000
Recently, issues of international taxation have also been analysed from a New Economic Geography perspective. These discussions show that agglomerative forces play a non negligible role. In the paper, we introduce explicitly taxation into a Footloose Capital Model and compare implications of taxation according to the residence principle and the source principle from a New Economic Geography perspective. We confirm that agglomerative effects change the results substantially compared to the standard analysis and that the two taxation principles have different implications for industry agglomeration.