Acosta, Camilo, and Ditte Håkonsson Lyngemark. 2025. “Spatial wage differentials, geographic frictions and the organization of labor within firms”. Regional Science and Urban Economics, 114: 104128.

DOI: 10.1016/j.regsciurbeco.2025.104128

Abstract

This paper studies the spatial organization of firms, both theoretically and empirically. Two new facts in Danish register data motivate the analysis: (i) firms have become increasingly spatially fragmented, and (ii) headquarters (HQ) establishments have become more manager-intensive. We develop and estimate a structural model in which firms allocate labor across establishments and produce non-rival, manager-intensive HQ services. Identification relies on exogenous variation in labor supply induced by commuting-augmented immigration shocks. We estimate elasticities of substitution across establishments of −9.8 for workers and −1.1 for managers, consistent with firms reallocating general labor more easily than managerial inputs. Our decomposition shows that rising managerial wages at HQs – interacted with firm-level scale effects – explain about half of the observed increase in HQ managerial intensity, highlighting the importance of intangible internal inputs in shaping firm spatial structure.

Aguirregabiria, Victor, Robert Clark, and Hui Wang. 2025. The Geographic Flow of Bank Funding and Access to Credit: Branch Networks, Synergies, and Local Competition. American Economic Review 115 (6): 1818–56.

DOI: 10.1257/aer.20200374

Abstract

Geographic dispersion of depositors, borrowers, and banks may prevent funding from flowing to high-loan-demand areas, limiting credit access. Using bank-county-year-level data, we provide evidence of geographic imbalance of deposits and loans and develop a methodology for investigating the contribution to this imbalance of branch networks, market power, and scope economies. Results are based on a novel measure of imbalance and estimation of a structural model of bank competition that admits interconnections across locations and between deposit and loan markets. Counterfactual experiments show branch networks, scope economies, and local competition affect credit flow to disadvantaged markets.

Almagro, Milena, and Tomás Domínguez‐Iino. 2025. “Location Sorting and Endogenous Amenities: Evidence from Amsterdam.” Econometrica，93(3):1031-1071.

DOI: 10.3982/ECTA21394

Abstract

This paper shows the endogeneity of amenities plays a crucial role in determining the welfare distribution of a city's residents. We quantify this mechanism by building a dynamic model of residential choice with heterogeneous households, where consumption amenities are the equilibrium outcome of a market for non‐tradables. We estimate our model using Dutch microdata and leveraging variation in Amsterdam's spatial distribution of tourists as a demand shifter, finding significant heterogeneity in residents' preferences over amenities and in the supply responses of amenities to changes in demand composition. This two‐way heterogeneity dictates the degree of horizontal differentiation across neighborhoods, residential sorting, and inequality. Finally, we show the distributional effects of mass tourism depend on this heterogeneity: following rent increases due to growing tourist demand for housing, younger residents—whose amenity preferences are closest to tourists—are compensated by amenities tilting in their favor, while the losses of older residents are amplified.

Balboni, Clare. 2025. In Harm's Way? Infrastructure Investments and the Persistence of Coastal Cities. American Economic Review 115 (1): 77–116.

DOI: 10.1257/aer.20191943

Abstract

Coasts contain a disproportionate share of the world's population, reflecting historical advantages, but environmental change threatens a reversal of coastal fortune in the coming decades as natural disasters intensify and sea levels rise. This paper considers whether large infrastructure investments should continue to favor coastal areas. I estimate a dynamic spatial equilibrium framework using detailed geo-referenced data on road investments in Vietnam from 2000 to 2010 and find evidence that coastal favoritism has significant costs. The results highlight the importance of accounting for the dynamic effects of environmental change in deciding where to allocate infrastructure today.

Buchholz, Nicholas, Laura Doval, Jakub Kastl, Filip Matejka, and Tobias Salz. 2025. “Personalized Pricing and the Value of Time: Evidence from Auctioned Cab Rides.” Econometrica 93(3),929-958.

DOI: 10.3982/ECTA18838

Abstract

We recover valuations of time using detailed data from a large ride‐hail platform, where drivers bid on trips and consumers choose between a set of rides with different prices and wait times. Leveraging a consumer panel, we estimate demand as a function of both prices and wait times and use the resulting estimates to recover heterogeneity in the value of time across consumers. We study the welfare implications of personalized pricing and its effect on the platform, drivers, and consumers. Taking into account drivers' optimal reaction to the platform's pricing policy, personalized pricing lowers consumer surplus by 2.5% and increases overall surplus by 5.2%. Like the platform, drivers benefit from personalized pricing. By conditioning prices on drivers' wait times and not on consumers' data, the platform can capture a significant portion of the profits garnered from personalized pricing, and simultaneously benefit consumers.

Cavalcanti Ferreira, Pedro, Alexander Monge-Naranjo, and Luciene Torres de Mello Pereira. 2025. “Of Cities and Slums.” Journal of Political Economy 133(9), 2693-2734.

DOI: 10.1086/736210

Abstract

We study the emergence and persistence of urban slums in Brazil. Using data on labor markets, housing costs, and access to education, we construct a quantitative model to explore the impact of slums on the country’s human capital and structural transformation. Urban slums emerge and persist due to their dual roles as intergenerational stepping stones for low-educated households and as blockades for higher-educated ones. Providing slum children access to schools in formal urban areas would have led to larger but shorter-lived slums. Improved rural schools, if available earlier during urbanization, would have vastly prevented the formation of urban slums.

Curci, Federico, and Federico Masera. 2025.”Flight from Urban Blight: Lead Poisoning, Crime, and Suburbanization.” The Review of Economics and Statistics 107 (3): 621–638.

DOI: 10.1162/rest_a_01323

Abstract

In this paper we study the effect of violent crime on residential and firms location decisions and their implications for segregation in cities. We do so by proposing a new instrument to exogenously predict violent crime in city centers. We base our instrument on chemical and medical evidence that links local characteristics of the soil to lead poisoning and aggression. We show that the increase in violent crime between 1960 and 1990 due to lead poisoning moved almost 8 million people to the suburbs. Firms followed by leaving the city centers. We then show that the suburbanization process was characterized by “white flight.”

Loumeau,Gabriel.2025.”Regional Borders, Commuting, and Transport Network Integration.” The Review of Economics and Statistics  107 (6): 1573–1587.

DOI: 10.1162/rest_a_01350

Abstract

This paper exploits spatial quasiexperimental variation around French departmental borders to provide novel evidence that regional borders disturb surrounding economic activity; namely, commuting flows, catchment areas, and residential density. The lack of integration of local transport networks at regional borders—leading to a 4.5 km travel distance penalty when crossing borders—explains the observed border effects. Using a spatial quantifiable equilibrium framework and accounting for construction costs, a policy simulation exercise shows that integrating local transport networks leads to a 6.36% average growth in real per capita residential income.

Miyauchi, Yuhei, Kentaro Nakajima, and Stephen J. Redding. 2025 “The Economics of Spatial Mobility: Theory and Evidence Using Smartphone Data.” The Quarterly Journal of Economics 140(4),  2507–2570.

DOI: 10.1093/qje/qjaf038

Abstract

We develop a tractable quantitative framework for modeling the rich patterns of spatial mobility observed in smartphone data. We show that travel is frequently undertaken as part of a travel itinerary, defined as a journey starting and ending at home that can include more than one intermediate stop on a given day. We show that these travel itineraries provide microfoundations for consumption externalities and generate both complementarity and substitutability between locations. We show that the consumption externalities implied by travel itineraries are central to matching quasi-experimental evidence from the shift to working from home. We find that these consumption externalities are key drivers of the agglomeration of economic activity in central cities and shape the relative welfare gains from alternative transport improvements in favor of investments in central cities.

Slattery, Cailin. 2025. “Bidding for Firms: Subsidy Competition in the United States.” Journal of Political Economy 133(8):2563-2614.

DOI: 10.1086/735509

Abstract

State and local governments in the United States compete to attract firms by offering discretionary subsidies. I use a private value English auction to model the subsidy bidding process and quantify the welfare effects of competition. The allocation of rents between states and firms depends on the heterogeneity in states’ valuations for firms and the substitutability of locations. I find that competition increases welfare by less than 5% over a subsidy ban, and states compete away the surplus, transferring all of the rents to firms. These findings dampen any interpretation of subsidy competition as an effective place-based policy.

/ DIEGO PUGA /