What Causes Spatial Variations in Economic Development in the United States?

This article examines the causes of spatial disparities in economic development in the United States. A theoretical model is developed to analyze the location decisions of firms and households. An empirical model is estimated to quantify the contribution of alternative factors to spatial variations in wage, employment density, housing price, and land development density. Results suggest that remoteness is a primary cause of spatial disparities in economic development, while natural amenities are a major determinant of housing prices. Despite the dominant role of geography, public investments in infrastructure and human capital development could contribute to economic development in remote areas. Copyright ©2008 American Agricultural Economics Association.