Essays in Spatial Economics

Between the seventeenth and nineteenth centuries, Northern Europe overtook Southern Europe, a reversal that preceded modern economic growth. I propose an underexplored channel for this transition: the Little Ice Age, a prolonged period of cooling and heightened climate volatility, whose economic impact was geographically uneven. Be- cause agricultural productivity is non-linear in temperature, the same cooling tightened the subsistence constraint much more in colder re- gions. In a Malthusian economy this forced households to work more, and higher labor input accelerated learning-by-doing and induced innovation, raising agricultural productivity. I formalize this mecha- nism in a subsistence labor–leisure model with endogenous knowl- edge accumulation and derive testable predictions. Calibrated sim- ulations show that regions facing greater climatic stress accumulate technology faster and escape the Malthusian trap earlier, reproducing the key features of the Little Divergence.