To explain the large differences in labor productivity across U.S. states, the authors estimate two models--one based on local geographical externalities and the other on the diversity of local intermediate services--where spatial density results in aggregate increasing returns. Both models lead...

After an earthquake hit Southern Italy in 1980, young men from certain towns were exempted from compulsory military service. We show that the exemption raised high-school-graduation rates of boys by more than 2 percentage points. We do this by comparing high-school-graduation rates of young...