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.

Abstract: The global fashion market continues to expand, yet fast fashion items are often discarded prematurely, generating substantial textile waste. Despite the industry’s large environmental footprint, few economic models address the structure of fashion and apparel markets. This paper develops a simple model of a differentiated durable-goods market, extending the CES monopolistic competition framework of Dixit and Stiglitz (1977). Durable goods last multiple periods but degrade over time. Firms introduce new varieties each period, and with free entry the number of varieties is determined endogenously. With an infinitely lived consumers, we analyze the roles of secondary markets. With representative consumers, the option to resell acts as a demand subsidy, lowering new-goods prices, increasing total durable-goods production, reducing product variety, and lowering consumer welfare. With heterogeneous consumers who differ in preferences for new versus second-hand goods, we find that a larger share of second-hand–goods lovers can raise resale prices, lower new-goods prices, reduce product variety, and increase total production. However, with two product types – high-quality durable goods and low-quality perishable goods, we show that a higher share of second-hand–goods lovers raises the resale price of high-quality goods, encouraging new-goods lovers’ demand for high-quality goods. This crowds out low-quality perishable goods and reduces total industry output, and encourages high-quality goods producers to lower price and increase durability, which add additional benefits. Overall, as production shifts toward high-quality durable goods, environmental harm is reduced.

Abstract：In low- and middle-income country cities, poor households often reside in unattractive locations, including flood-prone areas. This can be due to poor information about flood risks or acceptance of these risks in the face of lower housing prices. Poor households are also more vulnerable to floods than richer households given the low-quality housing they occupy. Does information on flood risks help households make better location and housing choices? To what extent will these choices be revised with increased flood risks from climate change? To answer these questions, we develop a polycentric land use model with heterogeneous income groups, formal and informal housing, and flood risks. The model is calibrated to the city of Cape Town (South Africa) and simulations are run to assess the impact of flood risks on land values and income segregation within the city, distinguishing between the effects of three types of flooding (fluvial, pluvial, and coastal). Although total damages from floods are greater for rich households, they represent a larger relative share of poor households’ incomes. Better information encourages the adaptation of poor households up to a certain point, and this allows them to mitigate most of the adverse consequences from climate change. Considering the different nature of flood types is key to understanding their responses.

【参考資料】

Masaki Nakabayashi (2025) “Legislating filial obligations: Property rights and filial piety in shogunate Japan,” Journal of Asian Economics, 98, 101923.

要旨：We first provide an overview of the latest estimates of Japan’s population from the eighth century to the mid-nineteenth century and confirm that Japan experienced a sharp fall in population from the ninth to the twelfth centuries and a modest decrease in the early eighteenth century. We next review institutional changes that accompanied population growth from the fourteenth century and the population stagnation in the eighteenth century, and conclude that the current stem family system in Japan, where the duty of support is mutual between parents and children, was formed in the eighteenth century as a response to aging.

Abstract: Going beyond the New Economic Geography focus on progress in transportation cost, this paper introduces the dynamic effect of environmental technology on residential location in long-run spatial equilibrium. It develops a model with two regions in which a spatial public good (environmental quality) is degraded by externalities of differentiated private consumption goods, but degradation is abated by those of a single private environmental good. Producing the imperfectly tradable consumption goods requires both mobile workers and immobile workers, while the perfectly tradable environmental good requires only immobile workers. Mobile workers’ location choices are explained by regional disparities in environmental quality and price indexes, rather than in wages. Progress in transportation technology dynamically improves freeness of trade, but progress in environmental technology has the opposite effect. Dispersion occurs when progress in transportation technology dominates, while greater progress in abatement technology may lead to agglomeration.

要旨：This paper develops new theoretical insights into how sectoral trade costs and demand patterns shape specialization and wage levels across locations. It presents two key results. First, locations with stronger demand for sectors with low trade costs command higher wage levels, conditional on productivity and population size. Second, contrary to conventional interpretations, higher wages—rather than larger market size—drive specialization in sectors with high trade costs. This pattern arises not from trade cost savings, but from stronger incentives for firms in low-trade-cost sectors to reduce production costs in order to compete across locations. Existing models have overlooked firms’ strategic incentive to locate production in smaller markets, where trade barriers weaken competitive pressures. These results arise under monopolistic competition and extend to models with perfect competition and external scale economies.

【Paper】

Abstract: The technical change from steam engines to electric motors dramatically transformed manufacturing activities during the Second Industrial Revolution. This paper explores how this technical change progressed and what consequences it brought for the evolution of economic geography. I hypothesize that electric motors powered by purchased electricity lowered barriers to entry in the manufacturing sector due to their significantly lower fixed costs compared to steam engines. To examine this hypothesis, I exploit the historical expansion of electricity grids in early 20th-century Japan and newly digitized establishment-level official records, including information on power sources of establishments. Descriptive evidence shows that electric motors were widely adopted by establishments of all sizes, whereas steam engines were primarily adopted by large establishments, indicating lower fixed costs of electric motors. Using hydropower potential as an instrument, I document that new entrants played a crucial role in driving this technical change and stimulating manufacturing activities. Overall, these findings lend substantial support for the hypothesis. Furthermore, I find that regions with earlier electricity access experienced substantial population growth throughout the early 20th century and exhibit larger economic activity even in the 21st century. These findings suggest a persistent impact of this technological shock: the rapid increase in entrant activities generated agglomeration forces in manufacturing, with accumulated effects still visible in the spatial distribution of economic activity today.

【Paper】　【Slide】

Abstract：Existing empirical research in economics on neighborhood racial sorting is overwhelmingly premised on the idea that racial preferences for a location depend on the racial shares in that location, without considering potential spatial spillover effects from nearby areas. Does this matter for the way we view the cross-section and dynamics of racial neighborhood segregation? We nest Schelling (1971)’s bounded neighborhood and spatial proximity theories within a discrete choice model, where the key distinction is precisely such spatial spillovers. We simulate the model and examine the data for 1970-2000 for more than 100 U.S. metros. Two features of the data are most compelling: the powerful presence of racial clusters and the fact that drastic racial change is concentrated at the boundary of these clusters. Both point to the spatial proximity model as the proper foundation for a theory of racial neighborhood evolution. We use these insights to revisit prominent results on racial tipping where our theory guides us to distinguish differences by location. While prior research pointed to powerful racial tipping in the form of White exit, we show this is largely driven by theoretically-distinct “biased white suburbanization” leading to White entry in remote areas. In urban areas far from existing Minority clusters, we find zero or small tipping effects, at odds with a bounded neighborhood interpretation. The most consistent effects of tipping, still of modest size, are found in areas adjacent to existing Minority clusters, confirming the relevance of the racial spillovers of the spatial proximity model. Existing research conflates these quite distinct effects. Overall, our results suggests that tipping is a less central feature of racial neighborhood change than suggested in prior research and that greater attention needs to be paid to spatial dimensions of the problem.

【参考資料】

Yoshifumi Konishi and Akari Ono, 2024, “Do Winners Win More from Transport Megaprojects? Evidence from the Great Seto Bridge in Japan.” Keio-IES Discussion Paper Series, DP2024-018.

要旨：Do industrial air pollution emissions become spatially dispersed or concentrated through investment in transportation infrastructure? What factors explain the spatial distribution of air pollution? To empirically investigate these questions, we develop a theoretical model consistent with insights from “Trade and the Environment” and “Quantitative Spatial Model”. Theoretically, we show that changes in air pollution can be expressed as a function of Market Access (MA) under heterogeneous environmental regulations and that these changes can be decomposed into scale, composition, and technique effects. To identify the causal effects, we exploit the substantial drop in transportation costs resulting from the construction of the Great Seto Bridge in western Japan during the 1980s and 1990s and construct an instrumental variable following the Recentered Approach. The estimation results indicate that changes in MA due to transportation investment lead to a reduction in ambient sulfur dioxide concentrations on average. Based on our theoretical model, we further examine whether there are heterogeneous effects on air pollution. Our analysis highlights that there are heterogeneous effects on industrial air pollution resulting from the pre-existing level of the MA variable and environmental regulations prior to transportation projects. This supports the spatial dispersion of air pollution through greater reductions in initially highly polluted areas.