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The economics of density: evidence from the Berlin wall

Ahlfeldt, Gabriel M. and Redding, Stephen J. and Sturm, Daniel and Wolf, Nikolaus (2012) The economics of density: evidence from the Berlin wall. SERC Discussion Papers, SERCDP0118. Spatial Economics Research Centre (SERC), London School of Economics and Political Science, London, UK.

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Identification Number: SERCDP0118

Abstract

This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical analysis because of stochastic shocks to worker productivity, which yield a gravity equation for commuting flows. To empirically disentangle alternative determinants of location choices, we use Berlin’s division and reunification as a source of exogenous variation in the surrounding concentration of economic activity. Using disaggregated data on land prices, workplace employment and residence employment for thousands of city blocks for 1936, 1986 and 2006, we find that the model can account both qualitatively and quantitatively for the observed changes in city structure.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/
Additional Information: © 2012 The Authors
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N34 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Europe: 1913-
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O18 - Regional, Urban, and Rural Analyses
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Date Deposited: 31 Jul 2014 14:51
Last Modified: 31 Jul 2014 14:51
Funders: Economic and Social Research Council, Department for Business, Innovation & Skills (BIS), Welsh Assembly Government
URI: http://eprints.lse.ac.uk/id/eprint/58600

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