A Spatial Knowledge Economy
Donald R. Davis, Jonathan I. Dingel
American Economic Review · 2019 · Volume 109 · Issue 1
Abstract
Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. The model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities and how variation in these premia emerges from symmetric fundamentals.
Keywords
Human Capital, Skills, Occupational Choice, Labor Productivity, Wage Level and Structure, Wage Differentials, Innovation and Invention: Processes and Incentives, Size and Spatial Distributions of Regional Economic Activity, Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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