Understanding employment decentralization by estimating the spatial scope of agglomeration economies
This article is revised on February 28th 2018. The revised version (Discussion Paper 376) can be found here.
This positive effect attenuates across geographic space and becomes insignificant after 40-80km. This non-monotone relation between wages and distance to economic mass is in line with recently observed trend towards employment decentralization, because it suggests that agglomeration economies on short distances, i.e. in city centers, are offset by congestion externalities. Additionally, this paper finds no evidence that foreign economic mass affects wages in the Netherlands, which suggests that national borders are still a substantial barrier for economic interaction.