NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Consumer Mobility and the Local Structure of Consumption Industries

Sumit Agarwal, J. Bradford Jensen, Ferdinando Monte

NBER Working Paper No. 23616
Issued in July 2017, Revised in January 2020
NBER Program(s):Economic Fluctuations and Growth, Industrial Organization, International Trade and Investment

We study local employment, establishment density, and establishment size across industries delivering final consumption, which comprise a substantial fraction of production, shape local amenities, and pay different wages. In a stylized model of consumer mobility, lower industry storability/durability concentrates demand in space, increasing equilibrium employment. Credit card transactions data show that consumer mobility is limited and varies substantially across sectors; moreover, expenditure declines more rapidly with distance in sectors transacted more frequently. Lower storability/durability, proxied by average transaction frequency, increases a sector’s local employment via higher establishment density. Variation in consumer mobility is as economically significant as consumers’ expenditure shares.

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Document Object Identifier (DOI): 10.3386/w23616

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