The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding

We study the relationship between geography and growth. To do so, we …rst develop a dynamic spatial growth theory with realistic geography. We characterize the model and its balanced growth path and propose a methodology to analyze equilibria with dierent levels of migration frictions. We bring the model to the data for the whole world economy at a 1 � � 1 � geographic resolution. We then use the model to quantify the gains from relaxing migration restrictions as well as to describe the evolution of the distribution of economic activity in the dierent migration scenarios. Our results indicate that fully liberalizing migration would increase welfare more than three-fold and would signi…cantly aect the evolution of particular regions in the world. We then use the model to study the eect of a spatial shock. We focus on the example of a rise in the sea level and …nd that coastal ‡ooding can have an important impact on welfare by changing the geographic-dynamic path of the world economy.

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