Primary Research Focuses: Spatial Economics and International Trade

Secondary Research Focus: Macroeconomics

References: 

• Esteban Rossi-Hansberg (Committee Chair)
• Erik Hurst
• Rodrigo Adão

Job Market Paper: “Technology and the Geography of Industrial Policy”

[Abstract] "Industrial policy around the world is increasingly targeting sectors heterogeneously across regions to account for sectoral agglomeration externalities. This paper provides a theoretical framework to study when such spatial targeting is optimal. I demonstrate that the optimal policy across regions depends on the underlying productivity structure: whether agglomeration affects Hicks-neutral (input-neutral) or Harrod-neutral (labor-augmenting) productivity, the two dominant formulations in spatial economics. When productivity is Hicks-neutral, optimal industrial subsidies increase with regional sector size. However, when productivity is Harrod-neutral, optimal industrial policy is a constant ad-valorem wage subsidy across all regions. I apply this framework to manufacturing in England using data on 153 regions, where I estimate the productivity structure and the agglomeration elasticity. In the Hicks-neutral case, place-based policies raise welfare by 5.1% versus 2% for uniform subsidies. In the Harrod-neutral case, uniform subsidies raise welfare by 3.1%, while place-based ones reduce welfare by 0.7%. The estimation reveals predominantly Hicks-neutral technology, supporting place-based over uniform policies for manufacturing in England."