The sorting of firms to locations, workers to firms, and families to neighborhoods are important elements of economic life. Central to the theory of local public goods and housing markets is the sorting of people into group of agents, in order to exploit their comparative advantages. Agents specialize in the activities that are most beneficial to them. The choices of peoples about where to work and live and the choices of firms about where to locate and operate are dynamic processes driven by a variety of factors, many of which are geospatial in nature. These geospatial factors include inherent physical attributes (such as rivers), human-created physical attributes (such as public infrastructures), and dynamic social and economic interrelationships (such as geopolitical entities like school districts, taxing bodies, or local zoning boards). Two issues have limited the scientific understanding of these types of processes and their role in human and social dynamics. First, data limitations have often prevented social scientists from accurately measuring a combination of geospatial and socioeconomic factors at a scale sufficiently fine to disentangle the role each plays in economic and social decision processes. Second, sophisticated economic models accounting for the diversity and heterogeneity of firms and consumers and the richness of the equilibrium sorting process are only now reaching their full empirical potential. This interdisciplinary research project will address both issues. The researchers will develop spatial social science tools to track the geospatial characteristics of human social sorting processes used by both firms and households, and they will use these tools together with new developments in hedonic analysis. The project will provide a method for modeling social dynamics by estimating the value of location-specific attributes, both for inherent geophysical attributes as well as those that are created over time by human interaction. The model will generate a characterization of the equilibrium resulting from the sorting process of firms, workers, and households and will provide a structure that can be estimated with the generated geospatial data. This will enable researchers to describe spatial data and will allow them to identify and estimate structural features of the data, which can then be used to understand how the economic and social system will respond to changes in the economic environment such as technological and demographic changes. Several data sources will be combined in this project to create measures of geospatial attributes and will use them with the hedonic methodology to study specific empirical models of location decisions and location equilibrium.
This project will develop and combine theoretical and empirical advances in hedonic models of human and social dynamics with advances in spatial social science. It will provide a better understanding of the dynamics of sorting. It will provide modeling tools to study the mechanisms of social and economic dynamics in the context of location decisions. It will provide empirical tools to measure geospatial attributes. These new tools will be applicable to many policy relevant issues that have important social implications, including environmental justice, racial segregation, school quality, community infrastructure, public amenities, and noxious facilities. Researchers in many fields, including economics, geography, geographic information science, and regional science, will be able to take advantage of the new tools. This project is supported by an award resulting from the FY 2004 NSF-wide competition on Human and Social Dynamics (HSD). Coordinated management of the HSD competition and the portfolio of HSD awards involves all NSF directorates and offices.
