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POPULATION DISPERSION VS. CONCENTRATION IN A TWO-REGION MIGRATION MODEL WITH ENDOGENOUS NATURAL AMENITIES

Authors


  • The authors are grateful for support from the James S. McDonnell Foundation, the National Science Foundation's Coupled Human-Natural Systems program grant number DEB 0410336 and the Long Term Ecological Research program grant number DEB 1027188 and the Ohio Sea Grant program. JEL: R12, R23, Q57.

Abstract

ABSTRACT Contrary to the predictions of the basic spatial equilibrium model, the long-run distribution of population across rural U.S. counties with high-valued natural amenities has become relatively more concentrated versus dispersed. We provide an explanation by developing a two-region model with mobile labor, production externalities and endogenous natural amenities. We find that strong preferences for natural amenities generally foster population dispersion. However, such preferences can also lead to population concentration when ecological degradation is low and man-made capital is a relatively scarce input into natural amenity production. Investments that enhance natural amenities are found to reduce the divergence between the steady state and optimal outcomes.

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