Economics of Density: the Case of Palestine

Abstract

This thesis explores the economic benefits of urban density on labor earnings in Palestine. To do so, I draw on literature on agglomeration economies and use it as a basis to explain the productivity gains from population density. I identify a shock between 1947-1950 from the Israeli-Palestinian conflict that might have disrupted the population density distribution. Using this identification strategy, I apply an instrumental variable methodology with the argu- ment that an exogenous shock to the Palestinian economy had affected labor earnings through the population density channel. The results show the significant existence of agglomeration economies in the Palestinian economy, which is consistent with the literature on agglomeration economies in developing and developed countries. In addition, Palestinian districts that expe- rienced an increase in population density due to the historical shock had experienced higher labor earnings, with an elasticity of approximately 0.12 percent. Keywords: urban density, agglomeration economies, labor productivity, Israeli-Palestinian conflict

Tato diplomova ́ pra ́ce zkouma ́ ekonomicke ́ pr ̌ı ́nosy me ̌stske ́ hustoty obyvatelstva na vy ́de ̌lky pracovnı ́ sı ́ly v Palestine ̌. Opı ́ra ́m se pr ̌itom o literaturu zaby ́vajı ́cı ́ se ekonomikami aglom- erace, ktera ́ slouz ̌ı ́ jako za ́klad pro vysve ̌tlenı ́ produktivnı ́ch pr ̌ı ́nosu ̊ plynoucı ́ch z hustoty osı ́dlenı ́. Na 'sledne ̌ identifikuji s ̌ok v letech 1947-1950 v du ̊sledku izraelsko-palestinske ́ho kon- fliktu, ktery ́ mohl narus ̌it prostorove ́ rozloz ̌enı ́ hustoty obyvatelstva.Na za ́klade ̌ te ́to identi- fikac ̌nı ́ strategie aplikuji metodologii instrumenta ́lnı ́ch prome ̌nny ́ch s argumentem, z ̌e exogennı ́ s ̌ok v palestinske ́ ekonomice ovlivnil vy ́de ̌lky pracovnı ́ sı ́ly pra ́ve ̌ skrze kana ́l hustoty obyvatel- stva.Vy 'sledky ukazujı ́ vy ́znamnou existenci aglomerac ̌nı ́ch ekonomik v palestinske ́ ekonomice, coz ̌ je v souladu s literaturou zaby ́vajı ́cı ́ se aglomerac ̌nı ́mi efekty v rozvojovy ́ch i rozvinuty ́ch zemı ́ch. Navı ́c okresy, ktere ́ v du ̊sledku historicke ́ho s ̌oku zaznamenaly na ́ru ̊st hustoty obyva- telstva, vyka ́zaly vys ̌s ̌ı ́ vy ́de ̌lky pracovnı ́ sı ́ly, s elasticitou pr ̌ibliz ̌ne ̌ 0,12 procent. Klı ́c ̌ova ́ slova: hustota me ̌st, aglomerac ̌nı ́ ekonomiky, produktivita pra ́ce, izraelsko-palestinsky ́ konflikt