Jordan Rappaport of the Federal Reserve Board in Kansas City discusses the paper he coauthored with Jeffrey Sachs on "The US as a Coastal Nation". He notes that 15% of the US county s land area are within fifty kilometers on coastal areas - the two oceans, the Great Lakes or on rivers that are navigable. However, 54% of the country s population reside in these county s signaling that most of the country s economic activity is located along the coasts.
There are several theories behind this high concentration such as that areas with access to water have high productivity, enjoyable atmosphere and a high quality of life. Rappaport wants to explore whether there is an economic explanation to explain this phenomena. He looks at New York s harbor as an example. New York has high productivity and inexpensive transportation costs. This raises the return to capital which leads to capital being supplied. With capital being supplied raises the marginal product of labor. This raises wages, which leads to labor being supplied, reinforcing the high return to capital. Where you see high productivity, you should also see high population and employment density. You should also see a high population density where you see a high quality of life. This leads to an inflow of labor lead to high return on capital which leads to an inflow of capital which raises wages which raises the inflow of labor. This explains why people move to San Diego and capital follows them out there.
One hypothesis is this is an historical leftover from the past. However Rappaport suggests this is not the case. River use declined in the 20th century. Weather makes coastal areas more temperate and this is an important factor for the south Atlantic coastal areas. A stronger form of history dependence was suggested by two Japanese economists Fujita and Mori in an article in the Journal of Development Economics when they said that port cities should have disappeared long ago when the original advantage of cheap water access became unimportant however they continue to exist and thrive is because of the lock in effect of self-agglomeration forces. What mattered during this period was being large and so these areas continued to grow.
Rappaport s regressions indicate that the falloff in population density around the oceans and Great Lakes is greater now than was during the late 19th century. He concludes that the advantage to coastal density cannot be fully explain as history dependant, that it is something more as the relevant density increased over time. He ran change and level regressions for 1890 to 2000, and 1890 to 1930 and found, controlling for initial density, a positive coefficient for the oceans.
Rappaport also examines productivity as compared to the quality of life to offer possible insights for population density along coastal areas. He looks at one s distance to a port with natural shelters and distance to the coast and found that what mattered most was one s distance to the port. Once he controlled for the distance to the port, the distance to the coast no longer mattered. He concludes that population density along coastal areas is related to productivity and not quality of life. He finds support for quality of life, but not a determining factor.
He closes the seminar by saying there is greater population density on coastal areas that has increased over time, and examined three areas as a possible explanation which includes a productivity, a quality of life or a history dependence stories. He concludes that there is much evidence supporting productivity, little evidence supporting quality of life, and some evidence supporting history dependence.
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