Cities have long been thought to drive economic growth. Despite this, analyses of spatial policies have largely ignored the effects of such policies on growth. In this paper, I develop a spatial endogenous growth model in which heterogeneous agents make forward-looking migration decisions and human capital investments over the life cycle. Local externalities in the human capital investment technology drive both agglomeration and growth. I show that, along a balanced growth path, the growth rate depends on the spatial distribution of human capital, making it sensitive to spatial policies. I calibrate the model to data on U.S. metropolitan areas and show that it can rationalize the faster wage growth of workers in big cities, as well as other key patterns in life-cycle wage profiles, migration decisions, and city characteristics. Because workers accumulate human capital at different rates depending on where they live, the model provides an environment in which spatial policy can not just attract skilled workers, but produce them, too. I find that policies that further concentrate skilled workers in large cities are growth-enhancing.

The agricultural sector is the dominant user of water, but its use is distorted by two key forces: (i) farmers’ imperfect property rights over water extraction and (ii) the various taxes and subsidies on their products. Using a rich collection of detailed geospatial data, we document that these patterns are pervasive across the globe. We then build a dynamic spatial general equilibrium model to quantify the potential welfare gains of reallocating global water use in agricultural production. In the model, each local water stock evolves endogenously as nearby farmers extract water as if from a common pool. Farmers’ choices of which crop to grow and how much to produce respond, in turn, to the level of the local stock and the prices they face in the global market. We quantify the model such that it rationalizes observed patterns in agricultural production and trends in water availability out of steady state. With the quantified model in hand, we consider how counterfactual agricultural policies shift water use and affect welfare in the long run.