Abstract: Education and labor mobility are key drivers in the production of human capital, fundamental to economic development. In the U.S., the varying skill production efficiencies of state-specific education systems and the dynamics of worker migration shape human capital of states, influencing economic outcomes at both the state and national levels. This paper develops a novel dynamic spatial general equilibrium model with overlapping generation framework in which heterogeneous individuals accumulate human capital and move across states. Calibrated to the U.S. economy, the model illustrates how variations in education efficiency lead to substantial crossstate income disparities and shows that internal migration can notably boost output in states with lower education efficiencies. At the national level, free mobility of workers yields a 6.9% output gain. Moreover, the model suggests that variations in human capital account for 46.6% of the state variation per capita output. Applying the calibrated model to analyze the Obama Administration’s Race to the Top initiative finds that the $4.1 billion grant spurred a 0.2% increase in U.S. GDP, mostly benefiting the grant-winning states and their neighbors. Additionally, alternative grant allocation experiments show that strategic reallocation of education grants, considering state skill production efficiencies, could further increase national GDP gains without necessarily worsening state income disparities.

Abstract: Do central slums provide essential economic and social benefits to the poor? We collected bespoke data for 5,000 households to study mass forced clearances in Addis Ababa. Evictees were offered alternative subsidized housing further from the center. Exploiting sharp clearance zone boundaries, regression-discontinuity estimates show negative impacts on social networks, but positive impacts on work, earnings, housing quality and environmental amenity. Relocating households close to their ex-ante neighbors eliminates social costs. Slums are not essential: relocation policies can be designed to fully compensate residents, and the sale value of cleared land more than covers the cost.

Abstract: This paper examines the role of labor market power in a spatial context. Using firm-level markdowns estimated from Chinese micro-level data, we find that migration has a significant effect on wage markdowns. We further investigate the underlying mechanisms, highlighting the critical role of migration in shaping the spatial structure of China’s labor market.