nep-geo New Economics Papers
on Economic Geography
Issue of 2004‒12‒20
sixteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Human Capital Allocation and Policy Intervention when there is Externality in Cities By Neville N. Jiang; Rui Zhao
  2. Do Liquidation Values Affect Financial Contracts? Evidence from Commercial Loan Contracts and Zoning Regulation By Efraim Benmelech; Mark J. Garmaise; Tobias Moskowitz
  3. Employment and Population in European Union: Econometric Models and Causality Tests. By Aguayo, Eva; Guisan, Maria-Carmen
  4. Are There Gender and Country of Origin Differences in Immigrant Labor Market Outcomes across European Destinations? By Adsera, Alicia; Chiswick, Barry R.
  5. On poles and centers : cities in the french style. By BOURDEAU-LEPAGE, Lise; HURIOT, Jean-Marie
  7. Identifying the Sources of Local Productivity Growth By Federico Cingano; Fabiano Schivardi
  8. System-Optimal Routing of Traffic Flows with User Constraints in Networks with Congestion By Jahn, Olaf; Möhring, Rolf; Schulz, Andreas; Stier Moses, Nicolás
  9. Entry thresholds and actual entry and exit in local markets By Carree,Martin; Dejardin,Marcus
  10. Non-Junk Junk Money: Technical Efficiency and Productivity across Junk and Scrap Dealerships By Voxi Heinrich S. Amavilah
  11. Dynamic Programming Methodologies in Very Large Scale Neighborhood Search Applied to the Traveling Salesman Problem By Ergun, Özlem; Orlin, James
  12. The Holdout Problem and Urban Sprawl By Thomas J. Miceli; C. F. Sirmans
  13. A Tale of Two Provinces: The Institutional Environment and Foreign Ownership in China By Huang, Yasheng; Di, Wenhua
  14. The Labor Market Effects of the 1960s Riots By William J. Collins; Robert A. Margo
  15. Effets de voisinage dans le modèle de Solow avec des externalités spatiales. By KOCH, Wilfried
  16. Spatial Correlates of U.S. Heights and BMIs, 2002 By Komlos, John; Lauderdale, Benjamin E.

  1. By: Neville N. Jiang (Department of Economics, Vanderbilt University); Rui Zhao (University of Illinois)
    Abstract: This paper studies the allocation of skilled and unskilled workers with different human capital levels between locations: city and rural area. In the city, activities are congregated thus there is externality in production. In rural area production is spread out and no externality exists. Given a distribution of workers with various human capital levels in an economy, the social optimal allocation gathers workers with higher human capital in each category in the city, which all competitive equilibria fail to achieve, As a result, any policies that keep workers with low human capital out of the city increase total output. We further demonstrate that in some cases it is necessary to impose direct and selective barrier on the rural-urban migration. However, such policy maintains the city premium for unskilled labor. Great incentives exist for illegal rural-urban labor flow.
    Keywords: city externalities, human capital distribution, migration
    JEL: H23 R13
    Date: 2003–12
  2. By: Efraim Benmelech; Mark J. Garmaise; Tobias Moskowitz
    Abstract: We examine the impact of asset liquidation value on debt contracting using a unique set of commercial property non-recourse loan contracts. We employ commercial zoning regulation to capture the flexibility of a property's permitted uses as a measure of an asset's redeployability or value in its next best use. Within a census tract, more redeployable assets receive larger loans with longer maturities and durations, lower interest rates, and fewer creditors, controlling for the current value of the property, its type, and neighborhood. These results are consistent with incomplete contracting and transaction cost theories of liquidation value and financial structure.
    JEL: G3 R0
    Date: 2004–12
  3. By: Aguayo, Eva; Guisan, Maria-Carmen
    Abstract: We analyse the interdependence between non-agrarian employment, real value-added and population in 98 European regions, by means of a pool of data for the period 1985-1995, and in 5 EU countries with a pool for 1961-97. We test causality by means of Hausman´s test in these three equations models. Besides we test causality by means of Granger´s test and with time series of each country for 1961-2000. The main conclusion is that there is some degree of interdependence among the three variable: 1) Population moves towards employment. 2) Production increases with population and with social and institutional factors (human capital and other ones). 3) Employment increases with production and population.. The results agree with the Freeman´s conclusions for regional employment and population movements in the USA.
    Keywords: Causality tests, Models of Employment and Population, Models of Employment and Production, European Economic, Regional Development
    JEL: C5 C51 J2 O18 O52 R23
    Date: 2004
  4. By: Adsera, Alicia (University of Illinois at Chicago, University of Chicago and IZA Bonn); Chiswick, Barry R. (University of Illinois at Chicago and IZA Bonn)
    Abstract: The paper uses the 1994-2000 waves of the European Community Household Panel to conduct a systematic analysis of the earnings of immigrants as compared to native workers, in particular to test whether there is any systematic variation in the labor market performance of immigrants across gender related to duration in the destination, schooling, age at immigration, country of origin, or country of destination. We find a significant negative effect of immigrant status on individual earnings of around 40% at the time of arrival in the pooled sample, although the difference is somewhat smaller for women. Those differences, however, vary greatly across countries with migrants in Germany and Portugal faring best relative to natives, and those in Sweden, Denmark, Luxembourg or Spain the worst, particularly among non-EU born migrants. Gender differences are more important among those born outside the European Union, with women doing relatively better than men. Among men, those from Asia, Latin-America and Eastern Europe receive the lowest earnings. Latin- American and Eastern European women are at the bottom of the women’s distribution. Earnings increase with duration in the destination and the foreign born "catch-up" to the native born, others variables being the same, at around 18 years in the destination among both men and women. Education matters more for women in terms of explaining earnings, whereas language skills are relatively more important for men.
    Keywords: immigrants, earnings, gender, countries of birth and destination, language
    JEL: J1 J61 F22
    Date: 2004–12
  5. By: BOURDEAU-LEPAGE, Lise (LEG - CNRS UMR 5118 - MSH - Université de Bourgogne); HURIOT, Jean-Marie (LEG - CNRS UMR 5118 - MSH - Université de Bourgogne)
    Abstract: The term "center" covers a multiple facets reality. A center is not only a concentration of activities. The concept of center can be associated with the ideas of domination, of power, of creation and of interaction. Consequently, the "multicentric city" is an oversimplified view of the contemporary city. The so-called "secondary centers" do not replicate the main center and they are clearly differentiated. Defining the "pole" as a concentration of activities and the "center" as a dominant pole in terms of high-order and strategic activities seems to be more accurate to interpret present urban restructuring in France. At the light of this distinction, the hypothesis can be supported that French cities generally have only one center but many poles.This is the Multipolar Specialized Monocentric hypothesis.
    Keywords: urban sprawl ; employment poles ; city center ; french cities
    JEL: R00 R30
    Date: 2004–11
  6. By: Riccardo Crescenzi (Università 'Roma TRE' - Dipartimento di Economia)
    Abstract: The paper addresses the “spatial” structure of agriculture in Poland whose spatial development is analysed from the beginning of the transition towards a market economy up until the country’s forthcoming accession to the EU and the correlated implementation of the Common Agricultural Policy (Cap). The paper analyses the social, political and economic forces behind the process of progressive differentiation in the regional structure of agriculture which have produced the existing disparities between the dynamic farming of the central and western areas and the semi-subsistence farming in the east. The analysis also explores the linkages between the spatial evolution of agriculture and the increasing disparities in terms of regional unemployment and development. In such a framework the Cap’s implementation by producing differential effects in relation to each region’s agricultural structure will lead to further polarisation of the spatial structure of agriculture and may exacerbate existing disparities. Therefore, the Cap’s contribution towards a balanced regional development depends upon its capacity to adapt itself to the needs of a comparatively backward agricultural system (with respect to that of the present fifteen members) and the specificity of its spatial structure. Consequently, it is of fundamental importance that sector intervention be complemented by an appropriate mix of rural development, regional and territorial policies .
    Keywords: Agriculture, Common Agricultural Policy, Poland, Regional disparities, Rural development.
    JEL: R
    Date: 2004–12–12
  7. By: Federico Cingano (Bank of Italy, Economic Research Department); Fabiano Schivardi (Bank of Italy, Economic Research Department)
    Abstract: Using firm-level based TFP indicators (as opposed to employment-based proxies) we estimate the effects of alternative sources of dynamic externalities at the local geographic level. Contrary to previous empirical work, we find that industrial specialization and scale indicators positively affect TFP growth at the city-industry level, while we do not find evidence that either the degree of local competition or productive variety impact on subsequent productivity growth. Employment-based regressions yield nearly the opposite results, in line with previous empirical work. We show that such regressions could suffer from serious identification problems when interpreted as evidence of dynamic externalities. This calls into question the conclusions of the existing literature on dynamic agglomeration economies.
    Keywords: local growth, productivity, dynamic externalities
    JEL: R11 O47
    Date: 2003–06
  8. By: Jahn, Olaf; Möhring, Rolf; Schulz, Andreas; Stier Moses, Nicolás
    Abstract: The design of route-guidance systems faces a well-known dilemma. The approach that theoretically yields the system-optimal traffic pattern may discriminate against some users, for the sake of favoring others. Proposed alternate models, however, do not directly address the system perspective and may result in inferior performance. We propose a novel model and corresponding algorithms to resolve this dilemma. We present computational results on real-world instances and compare the new approach with the well-established traffic assignment model. The quintessence is that system-optimal routing of traffic flow with explicit integration of user constraints leads to a better performance than the user equilibrium while simultaneously guaranteeing a superior fairness compared to the pure system optimum.
    Keywords: Intelligent Transportation Systems, Route Guidance, Traffic Flow, System Optimum, User Equilibrium, Multicommodity Flow, Constrained Shortest Path,
    Date: 2004–12–10
  9. By: Carree,Martin; Dejardin,Marcus (METEOR)
    Abstract: Bresnahan and Reiss (1991) derive entry thresholds (equilibrium numbers of firms) for local markets but do not investigate actual entry and exit flows. This paper investigates for thirteen Belgian retail and service industries whether markets with actual numbers of firms higher (lower) than the thresholds display exit (entry) in subsequent periods.
    Keywords: industrial organization ;
    Date: 2004
  10. By: Voxi Heinrich S. Amavilah (Glendale College & REEPS)
    Abstract: Some forms of environmentalism has generated many positive responses from concerned communities. Sophisticated theories addressing various aspects of environmental policy abound. At the practical level private economic agents following their self-interests confront the challenge of cleaning up the environment through recycling and other waste management programs. Among these agents are what I call here junk and scrap dealerships. But cleaning up will continue only if the marginal costs and benefits are at least equal. How do these firms fare? This simple question is rarely addressed. This paper examines the technical efficiency and productivity utilizing data for 26 junk and scrap wholesale dealerships in Arizona, USA. It finds that junk and scrap dealerships are technically efficient and productive on average. However, both efficiency and productivity vary widely among dealerships. A reasonable conclusion is that junk and scrap dealership contribute to a clean environment, and that may alone be a sufficient basis for continued investment in these labor-owned/manage- firms. This recommendation proceeds cautiously because available data did not support clear understanding of the economic efficiency and cost structures of firms.
    Keywords: junk and scrap: production, sales, technical efficiency and productivity
    JEL: L2 C21 R3
    Date: 2004–12–03
  11. By: Ergun, Özlem; Orlin, James
    Abstract: We provide two different neighborhood construction techniques for creating exponentially large neighborhoods that are searchable in polynomial time using dynamic programming. We illustrate both of these approaches on very large scale neighborhood search techniques for the traveling salesman problem. Our approaches are intended both to unify previously known results as well as to offer schemas for generating additional exponential neighborhoods that are searchable in polynomial time. The first approach is to define the neighborhood recursively. In this approach, the dynamic programming recursion is a natural consequence of the recursion that defines the neighborhood. In particular, we show how to create the pyramidal tour neighborhood, the twisted sequences neighborhood, and dynasearch neighborhoods using this approach. In the second approach, we consider the standard dynamic program to solve the TSP. We then obtain exponentially large neighborhoods by selecting a polynomially bounded number of states, and restricting the dynamic program to those states only. We show how the Balas and Simonetti neighborhood and the insertion dynasearch neighborhood can be viewed in this manner. We also show that one of the dynasearch neighborhoods can be derived directly from the 2-exchange neighborhood using this approach.
    Keywords: dynamic programming, neighborhood construction techniques,
    Date: 2004–12–10
  12. By: Thomas J. Miceli (University of Connecticut); C. F. Sirmans (University of Connecticut)
    Abstract: Developers attempting land assembly often face a potential holdout problem that raises the cost of development. To minimize this extra cost, developers will prefer land whose ownership is less dispersed. This creates a bias toward development at the urban fringe where average lot sizes are larger, resulting in urban sprawl. This paper examines the link between the holdout problem and urban sprawl and discusses possible remedies.
    Keywords: Urban sprawl, holdout problem, urban renewal, public use
    JEL: K11 R14 R52
    Date: 2004–11
  13. By: Huang, Yasheng; Di, Wenhua
    Abstract: In this paper, we use a unique dataset covering joint ventures in two provinces of China, Jiangsu and Zhejiang, to test the effect of the institutional environment for domestic private firms on ownership structures of FDI projects. Unlike many studies on this subject, we approach the issue from the perspective of local firms seeking FDI rather than from the perspective of foreign firms seeking to invest in China. Applying the prevailing bargaining framework in studies on ownership structures of FDI projects, we find that a more liberal institutional environment for domestic private firms is associated with less foreign ownership of the joint ventures operating there. Several mechanisms can contribute to this outcome. One is that a more liberal institutional environment may enhance the bargaining power of those domestic firms negotiating with foreign firms to form alliances (the capability effect). The other mechanism is that a more liberal institutional environment may reduce some of the auxiliary benefits associated with FDI - such as greater property rights granted to foreign investors - and thereby attenuate incentive to form alliances with foreign firms (the incentive effect).
    Keywords: China, FDI, private sector, institutional environment, joint venture,
    Date: 2004–12–10
  14. By: William J. Collins (Department of Economics, Vanderbilt University); Robert A. Margo (Department of Economics, Vanderbilt University)
    Abstract: Between 1964 and 1971, hundreds of riots erupted in American cities, resulting in large numbers of injuries, deaths, and arrests, as well as in considerable property damage that was concentrated in predominantly black neighborhoods. There have been few studies of a systematic, econometric nature that examine the impact of the riots on the relative economic status of African Americans, or on the cities and neighborhoods in which the riots took. We present two complementary empirical analyses. The first uses aggregate, city-level data on income, employment, unemployment, and the area's racial composition from the published volumes of the federal censuses. We estimate the "riot effect" by both ordinary least squares and two-stage least squares. The second empirical approach uses individual-level census data from the Integrated Public Use Microdata Series for 1950, 1970, and 1980. The findings suggest that the riots had negative effects on blacks' income and employment that were economically significant and that may have been larger in the long run (1960-1980) than in the short run (1960-1970). We view these findings as suggestive rather than definitive for two reasons. First, the data are not detailed enough to identify the precise mechanisms at work. Second, the wave of riots may have had negative spillover effects to cities that did not experience severe riots; if so, we would tend to underestimate the riots' overall effect.
    Keywords: Civil disturbances, Watts
    JEL: J15 R0
    Date: 2003–12
  15. By: KOCH, Wilfried (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Abstract: L'objectif de cet article est d'introduire des externalités spatiales dans le modèle de croissance de Solow afin de tenir compte de l'interdépendance géographique des régions. Ces externalités sont générées par le stock de capital accumulé par les régions voisines. Par conséquent, une politique économique visant à augmenter le taux d'investissement d'une région influence l'ensemble des régions par un effet multiplicateur spatial qui agit d'autant plus sur le revenu par tête que les régions sont géographiquement proches. Ainsi, nous utiliserons cet effet afin d'évaluer les conséquences d'une politique régionale sur la répartition spatiale des richesses dans l'Union Européenne élargie à 27 membres./ Recent theoretical and empirical work generally often focus on the interdependence of nations and regions underlying that the economy of one country or region is not independent of the economies of others. However, these models generally ignore the impact of location and neighborhood in explaining growth. This paper presents an augmented Solow model that includes spatial externalities and spatial interdependence among economies. We obtain a spatial econometric reduced form which allows testing the effects of the rate of saving and the rate of population growth on income per capita. Finally, we use the propriety of spatial multiplier effect in order to evaluate the impact of a shock on saving rate on European regional disparities.
    Keywords: Externalités spatiales ; Croissance économique ; Politique régionale ; Autocorrélation spatiale ; Econométrie spatiale / Spatial externalities ; Economic growth ; Regional policy ; Spatial autocorrelation ; Spatial econometric.
    Date: 2004–11
  16. By: Komlos, John; Lauderdale, Benjamin E.
    Abstract: Aiming to further explore possible underlying causes for the recent stagnation in American heights, this paper describes the result of analysis of the commercial U.S. Sizing Survey. Using zip codes available in the data set, we consider geographic correlates of height such as local poverty rate, median income, and population density. We find that after adjusting for variables known to influence height such as income and education, population density is negatively correlated with height among white men, but only marginally among white women. Similar analysis of Body Mass Index (BMI) also shows a negative correlation with population density after adjustment for income, education, and age for both sexes. Local economic conditions as measured by median income, unemployment rate or poverty rate do not have a strong correlation with height or weight after adjusting for individual income and education.
    JEL: J15 I31 I10 D60
    Date: 2004–12

This nep-geo issue is ©2004 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.