Cities are often divided into local governments, which invest in commuting infrastructure within their jurisdictions. In this paper, I study the implications of this metropolitan fragmentation on the provision of commuting infrastructure and the distribution of economic activity. I develop a quantitative equilibrium model of a city where local governments compete for residents and workers by investing in commuting infrastructure to maximize their land value. In this framework, fragmentation leads to the underprovision of commuting infrastructure and employment decentralization. I calibrate and fit the model to the city of Santiago, Chile, which is divided into 32 municipalities (in progress).
This paper explores the role of local social capital and within-household production on geographic mobility. We start by showing that lower-income households are less geographically mobile than their higher-income counterparts. Zooming in on childcare needs, we document that lower-income families rely more on local friends and relatives for their childcare needs rather than using market providers. Further, households living close to their local social networks are less likely to move, with lower income households showing the most negative effects. We propose a dynamic model of households' joint location and childcare production and estimate it by matching key moments in the data. Then, we quantify how this local social capital mechanism accounts for the patterns present in the data. Finally, we study the recently proposed American Families Plan, which heavily subsidizes market-based child care for lower-income households.