Urban Economics
Problem Set #2
Due, Sunday, Mar 3, 10pm, ONLY ONLINE!
1) No late problem sets
2) You can only upload one single file. No multiple file submissions.
3) For this Problem Set we accept only EXCEL formats.
4) Once submitted your problem set cannot be recalled anymore.
5) Show your work
(1) Go to Harvard’s Cluster Mapping Project’s main site (http://clustermapping.us) and click on “Clusters.”
Scroll down until you see “Show Clusters by – List.”. Select IT under Traded Clusters and scroll to the map on top.
(You must go to the map – don’t download any data if you don’t see the map)
On the left sidebar you now have various choices; select Economic Areas. Calculate for 2000 and for 2016 the CR4, HHI and Gini
Coefficients for employment and for the annual payroll (which is the product of Employment*Annual Wage). For the Gini Coefficient,
assume that all regions are of identical size. Note, make sure you match each area’s employment with its wage. Overall, you have to
calculate 12 coefficients (see table below).
Year CR4 HHI GINI
Employment
2000
2016
Annual Payroll
2000
2016
(2) There are 8 equally-sized counties in Corn-Land, which heavily depend on the production of corn. The corn industry employment in
the respective counties is given by:
County A B F H C D E G
Corn jobs 125 25 180 5 10 10 10 35
Calculate the Gini coefficient of job concentration.
(3) Assume there are only 6 counties in a country, and there are only three industries (beer, bread and shirts) that employ people. The
employment numbers are given in the Table below:
Employment Beer Employment Bread Employment Shirts
County 1 20 4 45
County 2 10 6 12
County 3 12 10 10
County 4 60 10 16
County 5 10 2 12
County 6 2 6 12
Calculate the ELQs for the following county and industry combinations:
(a) Beer and County 2
(b) Bread and County 3
(c) Shirts and County 4
(4) Go to the Factfinder of the Bureau of Census at https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
Into the search window enter the ZIP code 10005 (that’s the ZIP code of NYC’s Financial District).
On the left side bar select “Income”
Select “Income in the past 12 Months (Households …)”
You will see a window that shows the total number of households in 2017 (i.e., 4,239) and
the percentage of households in 10 income brackets. For each bracket assume the mean-point income. For instance.
“Less than $10,000” assume $5,000 or for “$25,000-$34,999” assume $30,000 etc. For the last bracket “$200,000 or more”
assume $380,667”. That will make sure you will reach the mean income of $201,734.
Calculate the TOTAL income and the income in each bracket.
Calculate the GINI coefficient. Note: since the household percentages in each bracket varies, the widths of the “bars” varies. In
fact, the width is now the percentage fraction. You need to multiply each height with its width.
(5) Labor in Boom and Recession.
Assume there is a labor force of 20 workers at an isolated site. During boom the firm faces a demand curve of P=100-Q.
During recession it faces a curve of 80-2Q. Boom and recession are equally likely to occur.
a) How many workers are employed in boom, how many during recession? What are the corresponding wages? Calculate the
consumer surplus of the firm in boom and in recession. What is the expected surplus?
b) Now assume a large cluster where the labor supply is infinitely elastic.
Assuming the same demand curves as in the Question above and the average wage of the isolated site (also from the Question
above), how many workers are employed in boom? How many are employed during recession? What are the corresponding
wages? Calculate the consumer surplus of the firm in boom and in recession. What is the expected surplus?
(6) Read the text “Gini by US Counties” and find out more….
a) East Carroll Parish, Louisiana has the highest Gini Index. Go to the Bureau of Census Factfinder and find the following
from the INCOME button on the left.
- what was the total number of households in 2010, 2015, and 2017 (estimates)
- how many households earned $100,000 or more in 2010, 2015, and 2017.
- how many households earned less than $10,000 in 2010, 2015, and 2017
- For all three years, what are the mean and median incomes? Calculate the ratio mean/median income.
- Between 2010 and 2017, do you think the GINI has grown, fallen or has remained the same? Just an educated guess with
some reasoning, no calculations needed.
2010 2015 2017
Households (est.)
Income $100k or more
Income less than $10k
Mean income
Median income
Ratio mean/median income
b) The text distinguishes two groups of low Gini counties. What are these groups?
Name an example county for each of these groups.
