Booming Cities in Chile: The Role of Exports for the Dynamics of Urban Employment

Abstract

During the beginning of the 21st century, cities in Chile have experienced a phase of rapid expansion regarding export activities. While a booming export sector may produce negative effects on other activities, there are also important impulses on urban economies, especially through the demand for Í€œnon-tradableÍ€ services, or through investment of excessive rents and the secondary circuit of capital. By contrasting booming and non-booming cities in Chile through a quantitative exercise, we identify different explanations for employment trends in three service sectors that are highly relevant for the urban economy. In booming cities there are important positive effects due to mining employment and revenues on employment in the construction and retail sectors. On the other hand, in the non-booming cities, mining loses its outstanding role, while public spending and the non-metal industry (including agricultural products processing) are more relevant to explain urban employment.