DP12150 Consumer Mobility and the Local Structure of Consumption Industries

Author(s): Sumit Agarwal, J Bradford Jensen, Ferdinando Monte
Publication Date: July 2017
Date Revised: January 2020
JEL(s): F1, F14, L8, R1, R2
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12150

We study local employment, establishment density, and establishment size across industries delivering final consumption, which comprise a substantial fraction of production, shape local amenities, and pay different wages. In a stylized model of consumer mobility, lower industry storability/durability concentrates demand in space, increasing equilibrium employment. Credit card transactions data show that consumer mobility is limited and varies substantially across sectors; moreover, expenditure declines more rapidly with distance in sectors transacted more frequently. Lower storability/durability, proxied by average transaction frequency, increases a sector's local employment via higher establishment density. Variation in consumer mobility is as economically significant as consumers' expenditure shares.