Discussion paper

DP12150 Consumer Mobility and the Local Structure of Consumption Industries

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.

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Citation

Monte, F, J Jensen and S Agarwal (eds) (2017), “DP12150 Consumer Mobility and the Local Structure of Consumption Industries”, CEPR Press Discussion Paper No. 12150. https://cepr.org/publications/dp12150