Applications of Regional Economics To Income Distribution, Migration, and Effects of Internet Commerce on Retailing Open Access
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This dissertation consists of three essays on regional economics that deal with earningsinequality in cities, interstate migration and spatial competition in the retail market. Chapter1 provides a theoretical framework to analyze the observation of rising earnings inequalitywith city size. Many papers have found a positive relation between income inequality andcity size in the US and other countries. This literature has assumed that the relation islinear. Tests performed here find that it is concave, resembling the classic Kuznets curve. Atheoretical model based on the Income Elasticity Hypothesis (IEH), explains that inequalityis a concave function of housing prices that tend to increase with city size. Further testsconfirm the concavity of the relation between Gini and housing costs that is predicted bythe IEH. Although for most cities, inequality still rises with housing costs, if housing costscontinue to grow in large cities, inequality should eventually fall, resembling the KuznetsCurve at the country level.Chapter 2 is an empirical study of the declining internal migration in the United States.Persistent declines in the rates of interstate and intercity migration have been noted in manyrecent studies. Research has indicated that this trend does not appear due to changes inpopulation composition. This paper retests the population composition hypothesis alongwith two other theoretical possibilities, falling returns to migration and improved search andmatching technology. Empirical tests establish results that are partially consistent with thehypothesis of falling returns to migration. The fact that return migration rates have risenwhile gross, initial and subsequent rates have fallen, reported for the first time in this study,is particularly difficult to reconcile with existing theories. And results in this paper suggestmore studies focusing on inter-regional equilibrium.Chapter 3 develops a theoretical model of the effect of on-line shopping on spatialcompetition of bricks-and-mortar retail stores. In this paper, a spatial competition model isbuilt with a large multi-product shopping center and numerous local single-product stores inthe market. The retailers therefore constitute a spatially inter-dependent retail system. Themodel suggests that more on-line alternatives to the durable good in the system has complexand counter-intuitive effects on the market size and pricing strategy in the long run.