Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence
Using fine-grained spatial data and a dynamic spatial general equilibrium model, this paper assesses the magnitude of mobility frictions in Latin America as well as the effects of their reduction on spatial development in the region. The results su...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099231306012226724/IDU040ec395c03220048480a53f05f73d2054bb7 http://hdl.handle.net/10986/37497 |
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okr-10986-374972022-06-02T05:10:40Z Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence Conte, Bruno Ianchovichina, Elena ECONOMIC GEOGRAPHY LATIN AMERICA MOBILITY FRICTIONS TRADE COSTS MIGRATION FRICTIONS QUANTITATIVE TRADE MODELS SPACIAL DEVELOPMENT PRODUCTIVITY DIFFERENCES WAGES LABOR RATES Using fine-grained spatial data and a dynamic spatial general equilibrium model, this paper assesses the magnitude of mobility frictions in Latin America as well as the effects of their reduction on spatial development in the region. The results suggest that in most Latin American countries, migration frictions calibrated based on spatially differentiated initial utility are on average smaller and less dispersed than those obtained assuming uniform within-country initial utility. A reduction in trade costs due to optimal investments in road infrastructure in most Latin American countries increases the present discounted value of real per capita income on average in the region by 15.1 percent. This effect is larger than the effects obtained with static quantitative trade models because of substantial dynamic gains. By contrast, a reduction in migration entry costs in the most productive and more populous locations in the Latin American countries has a negligible effect on the present discounted value of the region’s real per capita income, reflecting the relatively small dispersion in domestic migration frictions and their relatively low levels in top locations. In both counterfactuals, the welfare increases are significantly larger than the increases in real per capita output because the reductions in mobility frictions allow people to relocate to areas with better amenities and therefore derive higher utility. These results suggest that trade costs, not migration barriers, represent a major constraint to the efficient spatial distribution of economic activity and growth in Latin America. 2022-06-01T21:26:48Z 2022-06-01T21:26:48Z 2022-05 Working Paper http://documents.worldbank.org/curated/en/099231306012226724/IDU040ec395c03220048480a53f05f73d2054bb7 http://hdl.handle.net/10986/37497 English Policy Research Working Papers;10071 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Latin America & Caribbean |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ECONOMIC GEOGRAPHY LATIN AMERICA MOBILITY FRICTIONS TRADE COSTS MIGRATION FRICTIONS QUANTITATIVE TRADE MODELS SPACIAL DEVELOPMENT PRODUCTIVITY DIFFERENCES WAGES LABOR RATES |
| spellingShingle |
ECONOMIC GEOGRAPHY LATIN AMERICA MOBILITY FRICTIONS TRADE COSTS MIGRATION FRICTIONS QUANTITATIVE TRADE MODELS SPACIAL DEVELOPMENT PRODUCTIVITY DIFFERENCES WAGES LABOR RATES Conte, Bruno Ianchovichina, Elena Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| geographic_facet |
Latin America & Caribbean |
| relation |
Policy Research Working Papers;10071 |
| description |
Using fine-grained spatial data and a
dynamic spatial general equilibrium model, this paper
assesses the magnitude of mobility frictions in Latin
America as well as the effects of their reduction on spatial
development in the region. The results suggest that in most
Latin American countries, migration frictions calibrated
based on spatially differentiated initial utility are on
average smaller and less dispersed than those obtained
assuming uniform within-country initial utility. A reduction
in trade costs due to optimal investments in road
infrastructure in most Latin American countries increases
the present discounted value of real per capita income on
average in the region by 15.1 percent. This effect is larger
than the effects obtained with static quantitative trade
models because of substantial dynamic gains. By contrast, a
reduction in migration entry costs in the most productive
and more populous locations in the Latin American countries
has a negligible effect on the present discounted value of
the region’s real per capita income, reflecting the
relatively small dispersion in domestic migration frictions
and their relatively low levels in top locations. In both
counterfactuals, the welfare increases are significantly
larger than the increases in real per capita output because
the reductions in mobility frictions allow people to
relocate to areas with better amenities and therefore derive
higher utility. These results suggest that trade costs, not
migration barriers, represent a major constraint to the
efficient spatial distribution of economic activity and
growth in Latin America. |
| format |
Working Paper |
| author |
Conte, Bruno Ianchovichina, Elena |
| author_facet |
Conte, Bruno Ianchovichina, Elena |
| author_sort |
Conte, Bruno |
| title |
Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| title_short |
Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| title_full |
Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| title_fullStr |
Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| title_full_unstemmed |
Spatial Development and Mobility Frictions in Latin America : Theory-Based Empirical Evidence |
| title_sort |
spatial development and mobility frictions in latin america : theory-based empirical evidence |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099231306012226724/IDU040ec395c03220048480a53f05f73d2054bb7 http://hdl.handle.net/10986/37497 |
| _version_ |
1764487321067978752 |