26

There are several explanations for this in the literature (the order does not necessarily reflect importance of each explanation). Different Price Levels: Non-trivial portion of the wage differential is due to different price levels/cost of living. Once you adjust for different price levels and compare real wages gap narrows. This is obvious but since you ...


21

I would add two more, and rather primitive, factors in @1muflon1 long list: Labor input is not perfectly mobile with respect to the wage. We should never forget that the concept of a utility function allows for arbitrary "goods" to be "utility enhancing". It follows that migrating in chase of a better wage does not always prevails when ...


7

Consider a vector of stochastic variables $Z = (Z_1,...,Z_J)$. We assume each $Z_j$ is Frechet distributed $$Z_j \sim F(z_j) = \exp(-z_j^{-\theta}),$$ and that they are mutually independent such that $F_Z(z) = \prod_{j=1}^J \exp(- z_j^{-\theta}) = \exp(-\sum_j z_j^{-\theta})$. Furthermore, it is known that $$ \mathbb E[Z_j] = k(\theta) = \Gamma\left( 1-\frac{...


6

One way to expand the model is to allow for different income classes as stated in assumption (1) below. Let the model be completely standard with all the usual assumption of the monocentric city model as laid out in Brueckner (1987) the paper you cite. I will only present the basic idea of the expanded model. Hence I do not give proof of existence of ...


6

The utility function under consideration is $v(c,q)$ and then $$MRS(c,q) = \frac{\partial v/\partial q}{\partial v/\partial c} = v_2/v_1$$ make the functional denpendency of on $u$ explicit then you have $$\frac{\partial}{\partial u}MRS(c(u),q(u)) = \frac{\partial MRS(c(u),q(u))}{\partial c} \frac{\partial c(u)}{\partial u} + \frac{\partial MRS(c(u),q(u))}{\...


4

Answering your question involves the various sub-fields of Regional Economics, such as Spatial Competition theory (Hotelling, 1929), Economic Geography, Urban Economics (Alonso, 1964), New Economic Geography (Krugman, 1991), preferably in an integrated way. Indeed, each of these subfields relate to considerations that complement each other. As stated by ...


4

1. The first question is based on a misreading of the text. First of all it is quite correct that under the model assumptions stated: $$(A) \ \ p''(d) = \frac{t(y)H'(y) - t'(y)H(y)}{H(y)^2} y'(d),$$ however there is no problem because the book does not state that $$(B)\ \ p''(d) = \frac{t(y)H'(y) - t'(y)H(y)}{y'(d)}$$ the book instead states that the second ...


3

This is quite broad question, in fact the full answer to your question would probably require a textbook on urban economics, so also this answer is based on one; Brueckner (2011) Lectures on Urban Economics, MIT press, which is whole book largely dedicated to this (and other urban economics) issue(s). I will try to provide summary of main arguments found in ...


3

$\require{cancel}$ Start with the fact that $v = v(c, q)$ and use the triple product rule $$ \left(\frac{\partial v}{\partial c}\right)\left(\frac{\partial c}{\partial q}\right)\left(\frac{\partial q}{\partial v}\right) = -1\tag{1} $$ Now use $$ \color{orange}{c = y - tx - pq} ~~\Rightarrow~~~ \frac{\partial c}{\partial q} = -p \tag{2} $$ to conclude $$...


3

Agglomeration economies is a large concept that includes any effect that increases firms' and workers' income when the size of the local economy grows. The general idea is to estimate the overall impact of density on a local characteristic, such as the impact of local employment density on local productivity. The density estimate captures the agglomeration ...


3

I would consider county-level research macroeconomics. Microeconomics focuses on individuals and firms acting as decision makers. I think, looking at county-level aggregates, you are too high level to look at decision makers.


3

I recommend Cities, Agglomeration and Spatial Equilibrium by Edward Glaeser. It introduces a monocentric city model (the Alonso-Muth-Mills model) which is discussed in this excellent paper. This looks at how housing prices and densities vary across a city, and how people of differing incomes sort spatially. This is the spatial equilibrium within cities. ...


3

Masahisa Fujita is considered as one of the most famous theorist in urban economics. He is one of the pioneers of the New Economic Geography. His book Urban Economic Theory: Land Use and City Size, 1989, Cambridge is a master piece, laying down the theoretical foundations of urban economics. Also, you may read Fujita, Masahisa; Krugman, Paul; Venables, ...


2

Define the marginal rate of subsitution $MRS = \frac{v_2}{v_1}$. This gives the slope of the indifference curve at the optimal choice. For fixed utility level $u$, this is a function of $q$ alone. The value of $q$ itself is a function of all exogenous parameters (say $\gamma$). Given this, the first order condition can be written as: $$ \left.MRS(q(\gamma))\...


2

It depends on the focus of the research and the type of model(s) applied. A study of a particular good or industry at county level would be micro. This might include consideration of, for example, demand and supply of a good, the degree of competition in an industry, and the effect of a tax or subsidy on production or sale of a good. A study of the ...


2

@denesp comment is right to the point as regards the scope of this question. In street-talk "Gentrification" just means "things get more expensive" ("rightly" or "wrongly", that's another matter). The displacement of poor people will happen, for those who remain poor, where here "poor" is a relative concept "poor enough not to be able to afford the new cost ...


2

It somewhat depends what you mean by that. The process is more complicated with migrants to cities also acquiring skills/education there, e.g. Another important piece of work related to education-based motivation is Lucas (2004), who constructs a two-sector model where the urban sector pays a higher wage due to its high-skilled jobs which are not ...


1

Yes, this was written about at some length in Progress and Poverty by the American economist Henry George in the late 1800s.


1

The denser the population, the higher the local demand for any good, and under limited supply this means higher prices. At the same time, with a surplus of labor, there is no pressure to increase wages and in fact a downward pressure on them. The natural consequence is an easily observable wealth gap that gets worse over time without government intervention.


1

Urbanisation is a phenomenon with many effects, which can change depending of the government structure, the market structure, and the level of solidarity between citizens. In the two sections bellow, I'll try to summarize the impacts of urbanisation on rural and urban development. Urban growth and rural populations On the short-run, urbanization might have ...


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