nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒03‒20
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Border Effect in Spain By Salvador Gil-Pareja; Rafael Llorca-Vivero; José A. Martínez-Serrano; Josep Oliver-Alonso
  2. Evolving Federations and Regional Public Deficits: Testing the Bailout Hypothesis in the Spanish Case By Santiago Lago-Peñas
  3. Cities and the internet: the end of distance? By Jordi Pons-Novell; Elisabet Viladecans-Marsal
  4. Does neighboring "industrial atmosphere" matter in industrial location?. Empirical evidence from Spanish municipalities. By Ángel Alañón; Rafael Myro
  5. Cournot Competition, Market Size Effects, and Agglomeration By Gallo, Fredrik
  6. UEFA Euro 2004 Tourism Impact Analysis By José Cadima Ribeiro; José Viseu; Cristina Rodrigues; Tânia Delalande
  7. Elasticities of Regional and Local Administrations Expenditures - the Portuguese case By Paulo Reis Mourão
  8. Land Fragmentation and its Implications for Productivity: Evidence from Southern India By Raghbendra Jha; Hari K. Nagarajan; Subbarayan Prasanna
  9. Regional Mismatch and Unemployment: Theory and Evidence from Italy, 1977-1998 By Marco Manacorda,Barbara Petrongolo
  10. Labour Market Seasonality in Canada: Trends and Policy Implications By Andrew Sharpe; Jeremy Smith
  11. Russian Cities in Transition: The Impact of Market Forces in the 1990s By Ira N. Gang; Robert C. Stuart
  12. The Evolution of Cross-Region Price Distribution in Russia By Konstantin Gluschenko
  13. An Analysis of the Impact of Multiple Environmental Goods on House Prices By Katherine Kiel; Michael Williams
  14. Labour productivity, ICT and regions: The revival of Italian “dualism”? By Simona Iammarino; Cecilia Jona-Lasini; Susanna Mantegazza
  15. Spatial Decisions of Multinational Enterprises and their Effect on Local Firms By Dirk H. Ehnts

  1. By: Salvador Gil-Pareja; Rafael Llorca-Vivero; José A. Martínez-Serrano; Josep Oliver-Alonso
    Abstract: This paper analyses the border effect in Spain over the period 1995-98 using a data set on intranational trade that is unique in Europe. The results indicate that, after controlling for market size and distance, Spanish regions trade around 21 times more with the rest of Spain than they do with OECD countries. Moreover, the size of the Spanish bias is lower in the case of the Spanish regions’ exports than in the case of imports. Finally, the border effect is not uniform across Spanish regions.
  2. By: Santiago Lago-Peñas
  3. By: Jordi Pons-Novell; Elisabet Viladecans-Marsal
  4. By: Ángel Alañón; Rafael Myro
  5. By: Gallo, Fredrik (Department of Economics, Lund University)
    Abstract: We analyse a two-stage location-quantity game with many firms and two regions. We show that the firms will never agglomerate in the same location if transportation is costly between the regions. We also analyse the effects of differences in market size and economic integration on the allocation of industrial activity. For high levels of trade costs firms locate in different regions. Lowering the trade costs beyond a critical level triggers an agglomeration of industry in the larger region. This process of agglomeration is gradual in nature and trade costs have to be successively lowered for a full-scale agglomeration to take place.
    Keywords: agglomeration; cross-hauling; market size effects; spatial Cournot competition
    JEL: D43 F12 L13 R30
    Date: 2005–03–11
  6. By: José Cadima Ribeiro; José Viseu; Cristina Rodrigues; Tânia Delalande (Universidade do Minho - NIPE)
    Abstract: The purpose of this paper is exactly to approximate the tourism economic impact of the UEFA Euro 2004 in Portugal. The survey concentrates on the immediate, direct and short-term additional revenue brought into one region by the foreign sport event spectators. One innovating aspect of this paper is the direct data collection on the foreign visitors spending, contouring simulation and forecast problems. Results show an immediate short-term return investment costs generated an immediate and short-term revenue of less than one tenth of the investment costs and overall revenue leakage (or income export) of nearly 325% (50,142 million Euro) of the revenue within the defined regional spatial circuit.
    Keywords: UEFA Euro 2004, tourism impact of major sport events, sport event tourism.
    JEL: C42 R11 L83 O18
    Date: 2004
  7. By: Paulo Reis Mourão (Universidade do Minho - NIPE)
    Abstract: This work analyses the evolution of real public expenditures of local and regional administrations (LRA), in Portugsl, in the period after the Second World War. It also aims to estimate the elasticities associated to determinants, which explain the found growth. As most relevant results, it is focused that real public espenditures of LRA did not increase in a constant way - the most significant period of growth was between 1974 and 1990. A long-term relation was found among real public expenditures of LRA ( as a proportion of real Gross National Product), the Number of Employees in Public Administration, the Number of Unemployed and Public Revenues. These results are consistent with the bureaucracy being a source of discouragement referring to the decentralized public expenditures.
    Keywords: Public Expenditures; Cointegration; Decentralization
    JEL: H50 H54 H72 C13
    Date: 2005
  8. By: Raghbendra Jha; Hari K. Nagarajan; Subbarayan Prasanna
    Keywords: Length (pages): 37
    Date: 2005
  9. By: Marco Manacorda,Barbara Petrongolo (Dept. of Economics Queen Mary; Dept. of Economics London School of Economics; University of London; CEP and STICERD,London School of Economics)
    Abstract: This paper describes the functioning of a two-region economy characterized by asymmetric wage-setting. Labor market tightness in one region (the leading-region) affects wages in the whole economy. IN equilibrium, net labor demand shifts towards the leading region raise unemployment in the rest of the economy and leave regional wages unchanged, causing an increase in aggregate unemployment. This model has some success in explaining the evolution of regional unemployment rates in Italy during the period 1977-1998. Based on SHIW micro data on earnings and ISTAT data on unemployment rates we find strong evidence that wages in Italy only respond to labor market tightness in the North. We estimate that around one third of the increase in aggregate unemployment in Italy can be explained by regional mismatch, mainly due to an excess labor supply growth in the South.
    Keywords: Regional imbalances, Wage curve, Unemployment.
    JEL: E24 J23 J31
  10. By: Andrew Sharpe; Jeremy Smith
    Abstract: The objective of this paper is to examine labour market seasonality in Canada over the past three decades in order to shed light on what policies might be best suited to address seasonal economies. The main findings are as follows. The seasonality of the Canadian economy has declined since 1976 according to a wide range of output and labour market variables. However, since 1996 unemployment rate seasonality has increased. Seasonality – both in employment and the unemployment rate – is much higher for the young than for older workers and much higher for men than for women. Canada’s level of employment seasonality was more than three times higher than that in the United States in 2003. However, unemployment rate seasonality was perhaps surprisingly the same in the two countries. Relative to OECD countries, Canada has average unemployment rate seasonality, but very high employment seasonality. Atlantic Canada has higher levels of employment and unemployment rate seasonality than the other provinces reflecting a greater importance of primary industries and greater propensity of employers to hire part-year workers. Seasonal unemployment represents a much more important public policy issue than seasonal employment. The basic problem is an underlying lack of employment opportunities in rural and remote areas where seasonal unemployment is concentrated, not seasonal unemployment itself. An economic development strategy that ensures that all persons who want full year work can obtain it must be the most important element in any attempt to reduce seasonal unemployment. But such a strategy might need to be supplemented, at least in the short-to-medium term, by out-migration, particularly in very high unemployment regions, and incentives for firms to transform seasonal work into full-year work, or at least into near full-year work. Since unrestricted benefits for seasonal EI repeaters will not reduce seasonal unemployment, a strong case can be made that long-term income support for the seasonally unemployed is not in the long-run in the best interest of the beneficiaries, high unemployment regions, and the country, although reducing such benefits is politically difficult.
    Keywords: seasonality, seasonal employment, seasonal unemployment, unemployment, Atlantic Canada, Canada
    JEL: E24 J23 J65 R58 O51
    Date: 2005–02
  11. By: Ira N. Gang; Robert C. Stuart
    Abstract: This paper analyses Russian city growth during the command and transition eras. Our main focus is on understanding the extent to which market forces are replacing command forces, and the resulting changes in Russian city growth patterns. We examine net migration rates for a sample of 171 medium and large cities for the period 1960 through 2002. We conclude that while the declining net migration rate was reversed during the first half of the 1990s, restrictions continued to matter during the early years of transition in the sense that net migration rates were lower in the restricted than in the unrestricted cities. This pattern seemingly came to an end in the late 1990s.
    Keywords: cities; city growth; migration; Russia; urbanization
    JEL: J6 P20 R23
    Date: 2004–05–01
  12. By: Konstantin Gluschenko
    Abstract: The behavior of the entire cross-section distribution of prices in Russian regions is analyzed from 1992 through 2000, using non-parametric techniques. The cost of a staples basket is used as a price representative. Price dispersion measured as the standard deviation of prices is found to be diminishing since about 1994; and the shape of the cross-region distribution of prices tends to be more regular over time. To characterize intra-distribution mobility, a transition probability function (stochastic kernel) is estimated. It is also used to derive a long-run limit of the price distribution. Overall, the results suggest that, excluding a few years following the price liberalization, price convergence has been happening among Russian regions.
    Keywords: price convergence, price dispersion, distribution dynamics, market integration, Russia
    JEL: P22 R10 R15
    Date: 2004–07–01
  13. By: Katherine Kiel (Department of Economics, College of the Holy Cross); Michael Williams (Department of Economics, College of the Holy Cross)
    Abstract: It seems an established empirical fact that Superfund sites lower local property values. Two recent literature reviews (Farber, 1998, Boyle and Kiel, 2001) report that published academic papers on the topic verify that point. The EPA’s approach assumes that all sites negatively impact property values, and that the impact is similar for all sites. This paper examines 74 National Priorities List (NPL) sites in 13 U.S. counties in order to test these two implicit assumptions. Following the hedonic approach of Kiel (1995) and Kiel and McClain (1995), we find that some sites have the expected negative impact, while other sites have either no impact or a positive impact on local property values. We also consider the possibility of ‘stigma’ from sites by looking at those sites that have been cleaned during our sample period and find that some sites do appear to suffer from stigma, while others do not. We then use a meta-analysis approach to examine what factors affect the likelihood and extent of a decrease in property values near the sites. We find that larger sites in areas with fewer blue-collar workers are more likely to have the expected negative impact on local house prices.
    Keywords: Environment, Superfund, Hedonic regressions, meta-analysis, property values
    JEL: Q51 Q53 Q58 R21
    Date: 2005–03
  14. By: Simona Iammarino (SPRU, University of Sussex); Cecilia Jona-Lasini (Italian National Institute of Statistics (ISTAT), Rome, Italy); Susanna Mantegazza (Italian National Institute of Statistics (ISTAT), Rome, Italy)
    Abstract: Among the reasons underlying the slow economic convergence of some regions towards the national and the European Union average, the strong gap in technological endowment and innovation capacity has been indicated as one of the most important factors. The requirements of the current ‘knowledge-based economy’ and the contribution of Information and Communication Technology (ICT) to socio-economic change are very likely to have a significant impact upon regional differentials in the European Union. So far, however, it is rather unclear whether the new paradigm will spur greater socio-economic cohesion or, on the contrary, stronger territorial polarisation. This paper looks at the distribution of ICT-producing small and medium enterprises in Italy, comparing structural variables – in particular spatial and sectoral dimensions - with labour productivity levels. Ultimately, the objective is to shed some light on the role that ICT-producing firms might play with respect to regional gaps in the Italian economy, traditionally characterised by geographical polarisation and imbalances which are among the most striking in the “Europe of regions”. The first result of our analysis (carried out by using experimental micro data) is that a linkage seems to emerge between high labour productivity and the IT industry. This is in line with the insights of the economic theory of technical change, suggesting that IT-producing sectors are those where gains in productivity are by far the most evident. As expected, the geographical location of firms accounts for a good deal when looking at labour productivity levels across sectors, casting some concern on the development perspectives of the Italian regional divide.
    Keywords: regional development, Italy, Information and Communication Technology (ICT), small and medium enterprises, productivity
    JEL: R11 L63
    Date: 2004–11–10
  15. By: Dirk H. Ehnts (Universität Oldenburg)
    Abstract: Since the 1980s empirical research has been conducted on the in- fluence of MNEs on local firms. The spillovers predicted by growth theory models used in the research designs have not been found. The main result is the importance of increased competition for the productivity of local firms. When FDI flows expanded rapidly in the 1990s, it became clear that MNEs play an important role in international technology transfer. However, growth theory models are limited in that market structures and firms cannot be modeled explicitly. The New Economic Geography (NEG) is better equipped to handle these issues. Instead of spillovers it relies on linkages. Therefore, new insights might be gained by basing empirical research on a NEG model and looking for linkages among firms.
    Keywords: New Economic Geography, Foreign Direct Investment, Multinational Enterprises
    JEL: F2

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