DP12150 | The Geography of Consumption

Publication Date

07/16/2017

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Abstract

We provide the first cross-sectoral description of local consumption markets. Detailed credit card data show consumers have limited mobility and manage the spatial dimension of their transactions. In more frequently purchased sectors, expenditure declines faster with distance; further, the spatial distribution of transactions becomes more concentrated with income and less affected by travel cost shocks. We propose a simple theory of storability/durability of a sector's output as a new dimension affecting local consumption markets, and provide evidence that consumer mobility influences local employment, establishment density, and establishment size differentially across sectors. Consumers' spatial behavior appears important for analyzing local shocks.