Effective area as a measure of land factor

Empirical studies use the total area as a measure of land factor. This measure is flawed as it ignores the effectiveness of that total area. We develop an estimator of effective area based on spatial population distribution. The empirical application for the OECD countries highlights the advantages of the United States in land factor and shows that Eastern European countries have the highest proportion of effective area. The estimation also supports Helpman's view: if population density increases, population disperses.