The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy

By Lorenzo Caliendo, F. Parro, Esteban Rossi-Hansberg, P. Sarte. 2014

150 citations recorded by the source corpus.

We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we calibrate the model and carry out a variety of counterfactual experiments that allow us to gauge the impact of regional and sectoral productivity changes. We find that such changes can have dramatically different effects depending on the sectors and regions affected. In extreme cases, increases in productivity can have negative effects on real GDP (although welfare effects remain positive).

View Paper: https://www.semanticscholar.org/paper/743fcb673bab928d6aadfa9cd1ba7f9d239dba63

Citations in the corpus

• Commuting, Migration, and Local Employment Elasticities (2018, unknown): “…following McFadden (1974) and Eaton and Kortum (2002).9 For each worker ω living in location n and working in location i, idiosyncratic amenities (bniω) are drawn from an independent Fréchet distribution, Gni(b) = e −Bnib− , Bni > 0, > 1, (2) where the scale parameter Bni determines the average…”
• Optimal Spatial Policies, Geography, and Sorting* (2018, unknown): “To answer this question, we can assume like Caliendo et al. (2018) that a fraction ω of the returns to fixed factors is distributed locally to the Lj workers in j and the remainder is evenly split across all workers.”
• Input Specificity and the Propagation of Idiosyncratic Shocks in Production Networks (2016, unknown): “…the economy through industry linkages (Long and Plosser 1987; Jovanovic 1987; Durlauf 1993; Bak et al. 1993; Horvath 1998, 2000; Conley and Dupor 2003; Di Giovanni and Levchenko 2010; Carvalho 2010; Caselli et al. 2011; Acemoglu et al. 2012; Bigio and La’O 2013; Caliendo et al. 2014; Baqaee 2015).”