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Daniel Sturm, LSE Print
Tuesday, 28 February 2012, 14:00 - 15:15

Daniel Strum, London School of Economics

The Economics of Density: Evidence from the Berlin Wall

Abstract: In explaining the uneven distribution of economic activity, a key challenge is separating agglomeration and dispersion forces from locational fundamentals. We develop a quantitative model of city structure that incorporates both and allows for a large number of asymmetric locations. The model remains tractable and amenable to empirical analysis because of stochastic shocks to worker productivity, which yield a gravity equation for commuting flows. To empirically disentangle agglomeration and dispersion forces, we use Berlin's division and reunification as a source of exogenous variation in the surrounding concentration of economic activity. Using disaggregated data on land prices, workplace employment and residence employment for thousands of city blocks for 1936, 1986 and 2006, we find that the model can account both qualitatively and quantitatively for the observed changes in city structure.

Location: R42.2.113
Contact: Claude Adan, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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