nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒02‒27
nine papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. A Decomposition of total factor productivity growth: A Regional analysis of Indian industrial manufacturing growth By Surender Kumar
  2. Accounting for Differences in Labour Market Outcomes in Great Britain: Regional Analysis Using the Labour Force Survey By O'Leary, Nigel; Murphy, Philip D.; Latreille, Paul; Blackaby, David H.; Sloane, Peter J.
  3. The Law of one Price in the Russian Economy By Konstantin Gluschenko
  4. Income Segregation from Local Income Taxation When Households Differ in Both Preferences and Incomes By Kurt Schmidheiny
  5. Consumption growth and spatial poverty traps: an analysis of the effects of social services and community infrastructures on living standards in rural Peru By Philippe De Vreyer; Javier Herrera; Sandrine Mesplé-Somps
  6. Cities with suburbs: Evidence from India By Kala Seetharam Sridhar
  7. Marriage and the City By Gautier, Pieter A.; Svarer, Michael; Teulings, Coen N.
  8. Knowledge, networks of cities and growth in regional urban systems By Joan Trullén Thomàs; Rafel Boix Domenech
  9. Getting the most out of public sector decentralisation in Japan By Isabelle Joumard; Tadashi Yokoyama

  1. By: Surender Kumar (National Institute of Public Finance and Policy)
    Abstract: Total factor productivity (TFP) growth in industrial manufacturing is measured for 15 major Indian states for the period 1982-83 to 2000-01 using non-parametric linear programming methods. TFP growth is decomposed into efficiency and technological changes and also measure for the bias in technical change. The resulting information is used to examine whether the post-reform period shows any improvement in productivity and efficiency in comparison to the pre-reform one. Findings of the present exercise indicate the improvement in TFP. The recent change in TFP is governed by the technical progress in contrast to similar gain caused by the improvement in technical efficiency in the pre-reform regime. The technological progress in state manufacturing exhibited a capital using bias during the study period. Regional differences in TFP persist, although the magnitude of variation has declined in the post-reform period. Moreover, it is also found that there is a tendency of convergence in terms of TFP growth rate among Indian states during the post-reform years and only the states that were technically efficient at the beginning of the reform remain innovative.
    Date: 2004–12
  2. By: O'Leary, Nigel (University of Wales Swansea); Murphy, Philip D. (University of Wales Swansea); Latreille, Paul (University of Wales Swansea); Blackaby, David H. (University of Wales Swansea); Sloane, Peter J. (University of Wales Swansea and IZA Bonn)
    Abstract: Regional unemployment rates in Great Britain have narrowed dramatically in recent years. However, significant differences still remain in terms of both employment and economic inactivity rates, which may now better reflect relative labour market performance. This paper examines these differences in labour market outcomes using a unified empirical framework that decomposes regional differences in employment, economic inactivity and unemployment into components due to either structural or composition effects. The analysis highlights the important role that ill health and structural deficits currently play in accounting for regional differences in both employment and economic inactivity rates.
    Keywords: regions, employment, unemployment, inactivity
    JEL: J21
    Date: 2005–02
  3. By: Konstantin Gluschenko
    Abstract: Taking the law of one price as a test for market integration, the spatial set-up of Russia’s market integration over 1994-2000 is analyzed with the use of time series of the cost of a staples basket across Russian regions. The law is found to hold for about 50% to 60% of Russian regions, estimates of a threshold model suggesting rather high barriers to inter-regional trade. To reveal whether there is a movement towards market integration among non-integrated regions, dynamics of cross-sectional distribution of prices receives study. The results indicate that such a tendency does take place. An effort is made to identify forces responsible for Enter-regional price disparities.
    Keywords: market integration, price dispersion, price convergence, Russia, Russian regions
    JEL: P22 P25 R15 R19
  4. By: Kurt Schmidheiny
    Abstract: This paper presents a model of an urban area with local income taxes used to finance a local public good. Households differ in both incomes and their taste for housing. The existence of a segregated equilibrium is shown in a calibrated two-community model assuming single-peaked distributions for both income and housing taste. The equilibrium features income segregation of the population across the communities. The segregation is, however, imperfect: some rich households can also be found in poor communities and vice-versa. The calibrated model is able to explain the substantial differences in local income tax levels and average incomes across communities as observed in e.g. Switzerland. The numerical investigation reveals that the ordering of community characteristics critically depends on the substitutability between the public and the private good. The numerical investigation also suggests that taste heterogeneity reduces the distributional effects of local tax differences. The numerical investigation furthermore suggests that the rich community is able to set lower taxes when it is small.
    Keywords: Income Segregation, Income Sorting, Fiscal Decentralization, Income Taxation, Local Public Goods
    JEL: H71 H73 R13
  5. By: Philippe De Vreyer (Université de Lille II, DIAL); Javier Herrera (DIAL, IRD, Paris); Sandrine Mesplé-Somps (DIAL, IRD, Paris)
    Abstract: We test the effect of local geographic endowment of capital on household growth in living standards in rural Peru, using a four years unbalanced panel data set. Our theoretical model of household consumption growth allows for the effect of community variables to modify the returns to augmented capital in the household production function. Data are coming from three different sources: ENAHO 1997-2000 household surveys, the population census of 1993 and the district infrastructure census of 1997. Altogether the addition of these different data sources makes an unusually rich data set, at least when considered with developing country standards. As in Jalan and Ravallion (2002), we use a quasi-differencing method to identify the impact of locally determined geographic and socioeconomic variables, while removing unobserved household and community level fixed effects. GMM are then used to estimate the model parameters. Several significant interesting results appear, confirming that private consumption growth depends on local geographic variables. _________________________________ A partir d’un panel non cylindré de 4 années nous testons l’effet du capital géographique local sur la croissance du bien-être des ménages ruraux au Pérou. Le modèle théorique de croissance de la consommation autorise les variables mesurées au niveau communautaire à modifier le rendement du capital augmenté dans la fonction de production du ménage. Les données proviennent de trois sources : les enquêtes ménages ENAHO 1997-2000, le recensement de la population de 1993 et le recensement sur les infrastructures des municipalités de 1997. L’ensemble constitue une base de données d’une richesse exceptionnelle dans le contexte d’une économie en développement. A l’instar de Jalan et Ravallion (2002), nous utilisons la méthode de quasi-différenciation pour identifier les effets des variables géographiques tout en éliminant les effets fixes géographiques et individuels inobservés. L’estimation est effectuée moyennant l’emploi de la méthode des moments généralisés. Plusieurs résultats intéressants sont obtenus, confirmant l’hypothèse selon laquelle la croissance de la consommation des ménages dépend de facteurs géographiques locaux.
    Keywords: Politiques de lutte contre la pauvreté, croissance, externalités, économétrie des données de panel
    JEL: C33 H23 I18 I32 I38 O12
    Date: 2002–12
  6. By: Kala Seetharam Sridhar (National Institute of Public Finance and Policy)
    Abstract: For a country like India that contains a large number of Urban Agglomerations (UAs), suburbanisation has drawn little attention of the literature. I focus on this sparsely studied issue in this work. I calculate population, household and employment density gradients for India's UAs, using Mills' two-point technique. Next, I estimate population, household and employment gradient regressions. I find that the size of UA and lagged value of the population gradient explain population suburbanisation, as we would expect. I find evidence from the employment suburbanisation equation that it is the jobs that follow people, and not vice-versa, consistent with what has been found in the literature. In the employment sub-sector regressions, I find that the skills of the labor force are the most important factor explaining suburbanisation of manufacturing, transport, communications and trade/commerce jobs in India's urban areas. I conclude with policy implications.
    Keywords: India, Suburbanisation, Density Gradient, Mills' two-point technique, Population gradient, Employment gradient, Household gradient, Gradient regressions, Exponential density function
    JEL: R11 R12 R23 O18
    Date: 2004–12
  7. By: Gautier, Pieter A. (Free University of Amsterdam, Tinbergen Institute and IZA Bonn); Svarer, Michael (University of Aarhus); Teulings, Coen N. (SEO, University of Amsterdam and Tinbergen Institute)
    Abstract: Do people move to cities because of marriage market considerations? In cities singles can meet more potential partners than in rural areas. Singles are therefore prepared to pay a premium in terms of higher housing prices. Once married, the marriage market benefits disappear while the housing premium remains. We extend the model of Burdett and Coles (1997) with a distinction between efficient (cities) and less efficient (non-cities) search markets. One implication of the model is that singles are more likely to move from rural areas to cities while married couples are more likely to make the reverse movement. A second prediction of the model is that attractive singles benefit most from a dense market (i.e. from being choosy). Those predictions are tested with a unique Danish dataset.
    Keywords: marriage, search, mobility, city
    JEL: J12 J64
    Date: 2005–02
  8. By: Joan Trullén Thomàs (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona); Rafel Boix Domenech (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: The objective of this paper is to measure the impact of different kinds of knowledge and external economies on urban growth in an intraregional context. The main hypothesis is that knowledge leads to growth, and that this knowledge is related to the existence of agglomeration and network externalities in cities. We develop a three-stage methodology: first, we measure the amount and growth of knowledge in cities using the OCDE (2003) classification and employment data; second, we identify the spatial structure of the area of analysis (networks of cities); third, we combine the Glaeser - Henderson - De Lucio models with spatial econometric specifications in order to contrast the existence of spatially static (agglomeration) and spatially dynamic (network) external economies in an urban growth model. Results suggest that higher growth rates are associated to higher levels of technology and knowledge. The growth of the different kinds of knowledge is related to local and spatial factors (agglomeration and network externalities) and each knowledge intensity shows a particular response to these factors. These results have implications for policy design, since we can forecast and intervene on local knowledge development paths.
    Keywords: Knowledge city, networks of cities, urban growth, external economies, spatial econometrics.
    JEL: R11 R12 O3
    Date: 2005–01
  9. By: Isabelle Joumard; Tadashi Yokoyama
    Abstract: Revamping fiscal relations across levels of government is of paramount importance in supporting fiscal consolidation and public sector effectiveness. This paper analyses a number of problems, including regulations that limit local governments’ ability to innovate and respond to local citizens’ preferences, the inefficient system of intergovernmental grants, the complex structure of local taxes and fiscal rules which are too lenient to secure fiscal discipline. The paper concludes that the grant system should be reformed to promote local governments’ incentives to introduce innovations so as to better respond to needs at lower cost. Barriers to the effective use of sub-national governments’ taxing powers should be removed while efforts should be made to keep the tax system as simple and neutral as possible. Existing fiscal rules and market instruments should be hardened. This would require that the central government state clearly that it will not intervene as a lender of last resort to local government and ensure adequate information on local governments’ outstanding and implicit liabilities is available. This Working Paper relates to the 2005 OECD Economic Survey of Japan ( <p> Optimiser l’impact de la décentralisation au Japon <p> La réforme des relations financières entre l’État et les collectivités territoriales est essentielle pour soutenir le processus d’assainissement budgétaire et l’efficacité du secteur public. Ce document met en lumière un certain nombre de problèmes, notamment les réglementations qui limitent la capacité des collectivités territoriales à innover et à répondre aux préférences des citoyens, un système inefficace de transferts intergouvernementaux, une fiscalité locale excessivement complexe et des règles budgétaires trop laxistes. Ce document conclut qu’une réforme du système des transferts est nécessaire pour inciter les collectivités territoriales à innover afin de répondre mieux et à moindre coût aux besoins des citoyens. Les dispositions institutionnelles qui limitent l’utilisation effective des pouvoirs des collectivités territoriales en matière d’impôts doivent être éliminées tout en s’assurant que le système fiscal soit le plus simple et le plus neutre possible. Les règles budgétaires en vigueur doivent être rendues plus strictes et le fonctionnement des marchés financiers amélioré. Cela requiert que l’État annonce clairement qu’il ne jouera pas le rôle de préteur en dernier ressort en cas de difficultés financières des collectivités territoriales et qu’il s’assure de la qualité des informations concernant leurs engagements explicites et implicites. Ce Document de travail se rapporte à l'Etude économique de l'OCDE du Japon 2005 (
    Keywords: Fiscal federalism;local government;intergovernmental grants;fiscal discipline;Japan
    JEL: H2 H7 R58
    Date: 2005–01–27

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