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Local Ties in Spatial Equilibrium

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  • Zabek, Mike

Abstract

Someone who lives in an economically depressed place was probably born there. And having workers with local ties – who prefer to live in their birthplaces – leads to smaller migration responses in depressed places. Smaller migration responses lead to lower real incomes and make incomes more volatile, a form of hysteresis. Local ties can also persist for generations. Additionally, subsidies to economically depressed places cause smaller distortions, since few people want to move to depressed places. Finally, subsidies to productive places increase aggregate productivity, since they induce more migration.

Suggested Citation

  • Zabek, Mike, 2018. "Local Ties in Spatial Equilibrium," SocArXiv rpq5z_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:rpq5z_v1
    DOI: 10.31219/osf.io/rpq5z_v1
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