AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Local Industrial Policy and Sectoral Hubs
AEA Papers and Proceedings
vol. 111,
May 2021
(pp. 526–31)
Abstract
We study the desirability of industrial policies that generate sectoral hubs using a quantitative spatial model with cognitive nonroutine and other occupations. The productivity of each occupation in an industry depends on sector-specific production externalities, which we estimate using a model-implied instrumental variable approach. We find that the optimal policy gives rise to national hubs in coastal cities in tradable services, like professional services, and smaller regional hubs in less tradable services, like health and education. The optimal policy prescribes developing manufacturing in smaller towns. We decompose the implied changes in local costs and the available varieties in each sector.Citation
Rossi-Hansberg, Esteban, Pierre-Daniel Sarte, and Felipe Schwartzman. 2021. "Local Industrial Policy and Sectoral Hubs." AEA Papers and Proceedings, 111: 526–31. DOI: 10.1257/pandp.20211076Additional Materials
JEL Classification
- R32 Other Spatial Production and Pricing Analysis
- L52 Industrial Policy; Sectoral Planning Methods
- R12 Size and Spatial Distributions of Regional Economic Activity