Discussion Papers 2016

CIRJE-F-1026

"Industrial Structure in Urban Accounting"

Author Name

Oshiro, Jun and Yasuhiro Sato

Date

October 2016

Full Paper

PDF file

Remarks

Forthcoming in Regional Science and Urban Economics.  

Abstract

We develop a multisector general equilibrium model of a system of cities to study the quantitative significance of industrial structure in determining spatial structure. We first identify three types of wedges that capture the extent to which the standard urban economic model fails to explain empirically: efficiency and labor wedges, and amenity. We then calibrate the model to Japanese regional data and run counterfactual exercises to identify the significance of each wedge in each sector. Our analysis shows (i) that the labor wedge plays the primary role in determining the spatial structure, and (ii) that the secondary sector is the most influential.

Keywords: Urban accounting; Industrial structure; System of cities; Agglomeration