Essays in Trade and Political Economy

Takashi Onoda
1. I develop a two-city model to explain a new stylized fact: high-income cities specialize in income-elastic sectors. The model has heterogeneous income elasticities and mobile agents, and either heterogeneous fundamental productivities or heterogeneous amenities generate the specialization pattern through the home market effect. The model also implies that tradable sector shares affect income inequality across locations by driving the home market effect. I provide empirical evidence of this with U.S. CBSA-level data. Finally, I...
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