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Advanced Economic Seminars 228:  Urban Specialization: from Sectoral to Professional

Publisher:   Time:2018-11-06 14:15:32

Topic: Urban Specialization: from Sectoral to Professional

Lecturer:James R. Markusen,  University of Colorado Boulder

Time: 15:30-17:00 p.m. 7th of November 2018Wednesday

Venue:B219, Zhixin Building

Abstract: Firms require several professions (such as engineering, finance, advertising) to produce output, and the productivity of professions within a country may vary across cities. Are firms integrated, purchasing services of all professions in one city, or fragmented, purchasing from different cities? We address this question in a model combining elements of several literatures including economic geography, multinational firms, urban economics, and trade theory. A two-city country trades with the larger world, and firms and workers within the country are mobile between the two cities. Industries differ in the intensity with which they use different professions. Comparative advantage is ultimately due to the productivity of each profession in each city, and this varies according to Ricardian comparative advantage or location- and profession-specific scale economies. Our approach creates a distribution of fragmented and integrated firms across industries and across cities. We generate a number of economic insights, several of which can be examined empirically. First, as fragmentation costs fall, a city's professional specialization rises and its sectoral specialization falls. Second, as fragmentation costs fall a city's industrial mix becomes a weaker predictor of its occupational mix, consistent with Barbour and A. Markusen (2007).


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