ESTIMATING A DYNAMIC SPATIAL EQUILIBRIUM MODEL TO EVALUATE THE WELFARE IMPLICATIONS OF REGIONAL ADJUSTMENT PROCESSES: THE DECLINE OF THE RUST BELT |
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| Authors: | Chamna Yoon |
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| Affiliation: | Sungkyunkwan University, Republic of KoreaI would like to thank my dissertation committee members, Holger Sieg, Xun Tang, and Kenneth I. Wolpin (chair), for their support. I would also like to thank two anonymous referees, as well as Gilles Duranton, Hanming Fang, Tom Holmes, Illenin Kondo, Donghoon Lee, Petra Todd, and the seminar participants and discussants at various different universities and conferences for their comments and suggestions. This research was conducted with restricted access to Bureau of Labor Statistics (BLS) data. The views expressed here do not necessarily reflect the views of the BLS. This research was supported in part by the National Science Foundation through XSEDE resources provided by the XSEDE Science Gateways program. |
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| Abstract: | This article develops and estimates a new dynamic spatial equilibrium model to study the regional transition dynamics and its impact on individual and aggregate welfare. The model consists of a multiregion, multisector economy comprised of overlapping generations of individuals with heterogeneous skills and mobility costs. The empirical findings suggest that a large fraction of the decline of the Rust Belt can be attributed to the reduction in its region‐specific comparative advantage in the goods‐producing sector. This decline generated significant differences in welfare across regions. Policy experiments show that such inequality can be significantly reduced through place‐based policies. |
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