DP3853 What are Falling Transport Costs doing to Spatial Concentration Across US Counties?
|Author(s):||Klaus Desmet, Marcel Fafchamps|
|Publication Date:||March 2003|
|Keyword(s):||location, spatial concentration, transport costs, US counties|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=3853|
Theory is divided on whether falling transport costs lead to more or less spatial concentration of economic activity. Using US county-level data we find that aggregate employment became more concentrated between 1972-92. This aggregate picture hides important differences between sectors though. Whereas non-service sectors have been spreading out, service sectors have become increasingly concentrated by absorbing jobs from nearby areas. This cross-sectional variation lends support to Krugman and Venables (1995), who suggest that falling transport costs initially lead to more concentration, and later on to more dispersion.