Essays In Urban And Regional Economics
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This dissertation consists of three chapters exploring how geography and housing markets affect economic outcomes at the individual, firm and industry levels, both within and across cities. Chapter 2 analyses economic outcomes at the individual level, by providing the first estimate of the causal effects of commuting distance on inventor productivity using employer relocations as exogenous shocks. We find that every ten-kilometer increase in distance is associated with a 5% decrease in patent counts per inventor-firm pair per year, and an even greater 7% decrease in patent quality. Chapter 3 studies outcomes at the firm level, providing the first look in the literature of how cultural entry barriers can affect firm entry decisions, using the setting of the Canadian retail banking industry. In order to do so, we estimate a perfect information static entry game between Canadian financial institutions, incorporating both cultural entry barriers and other demographic variables. We find that the effect of a one-standard deviation increase in cultural entry barriers equals the combined effect of a one-standard deviation change in income per capita, population, business activity, and unemployment rate. Chapter 4 proposes and analyzes a new channel for the propagation of localized shocks via product market interactions. In short, localized shocks may induce differential changes in land and home prices across cities, which would act as a cost shock to local firms in tradable industries, relative to firms in the same tradable industry, located in other cities. Tradable industries located in cities experiencing relative negative cost shocks would see increased profit margin and market share, as existing firms expand, and new firms move in. To test this channel empirically, I use a novel identification strategy of housing price decomposition that subtract out the effects of observable spatially correlated trends from overall housing price changes, to obtain local idiosyncratic shocks in housing prices. I find that higher housing price growth in other cities with similar industries have a consistent and significant positive effect on same-industry growth in the focal city.