nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒09‒11
twenty-two papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. A Model of Regional Housing Markets in England and Wales By Arnab Bhattacharjee; Chris Jensen-Butler
  2. Determinants of City Growth in Brazil By Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
  3. Local Factors and Innovativeness – An Empirical Analysis of German Patents for Five Industries By T. Broekel; T. Brenner
  4. The use of permanent and temporary jobs across Spanish regions: Do unit labour cost differentials offer an explanation? By José Ignacio García Pérez; Yolanda Rebollo Sanz
  5. Causes of sprawl: A portrait from space By Marcy Burchfield; Henry G. Overman; Diego Puga; Matthew A. Turner
  6. Determinants of Regional Entry and Exit in Industrial Sectors By Nyström, Kristina
  7. Une application expérimentale de la méthode de minimisation de l'entropie croisée: l'estimation des flux d'échanges interrégionaux au Québec By Jean Dubé; André Lemelin
  8. Immigrants’ Location Preferences: Exploiting a Natural Experiment By Piil Damm, Anna
  9. Social Networks in Labor Markets By Antoni Calvo-Armengol; Yannis M. Ioannides
  10. Where do human capital externalities end up? By Alberto Dalmazzo; Guido de Blasio
  11. FDI Inflows to Sweden Consequences for Innovation and Renewal By Johansson, Börje; Lööf, Hans
  12. The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts By David Card; Ethan G. Lewis
  13. La economía del Departamento de Sucre: ganadería y sector público By María M. Aguilera Díaz
  14. Employment Effects of Dispersal Policies on Refugee Immigrants: Empirical Evidence By Piil Damm, Anna; Rosholm, Michael
  15. How Do House Prices Affect Consumption? Evidence From Micro Data By John Y. Campbell; João F. Cocco
  16. Heritage and Agglomeration: The Akron Tire Cluster Revisited By G. Buenstorf; S. Klepper
  17. Experimental Analysis of Neighborhood Effects By Jeffrey R. Kling; Jeffrey B. Liebman; Lawrence F. Katz
  18. Tolima: deuda pública municipal con el sector financiero 1994-2003 By Pastor Enrique Quintero Carvajal; Jorge Edgar Silva Veloza
  20. O Brother, Where Art Thou? The Effects of Having a Sibling on Geographic Mobility and Labor Market Outcomes By Helmut Rainer; Thomas Siedler
  21. Engines of growth: why low-income communities need small business By anonymous
  22. The Danish Dispersal Policy on Refugee Immigrants 1986-1998: A Natural Experiment? By Piil Damm, Anna

  1. By: Arnab Bhattacharjee; Chris Jensen-Butler
    Abstract: We propose and estimate an economic model of regional housing markets in England andWales, incorporating both the macroeconomic relationships between prices, demand and supply and a microeconomic model of search, matching and price formation. The empirical model, estimated separately for each of the 10 government office regions in England and Wales, validates the economic model. However, we find substantial heterogeneity across the regions, which is potentially useful in informing housing and land-use policies. In addition, the model allows completely unrestricted inter-regional spatial relationships. The estimated spatial autocorrelations imply different drivers of spatial diffusion in different regions, the understanding of which can be improved by further work.
    Keywords: Housing markets; Search and matching; Spatial diffusion; Housing demand; Housing Supply.
    JEL: R21 R31 R33 C31
    Date: 2005–06
  2. By: Daniel da Mata; U. Deichmann; J. Vernon Henderson; Subir V. Lall; H.G. Wang
    Abstract: In this paper, we examine the determinants of Brazilian city growth between 1970 and 2000. We consider a model of a city, which combines aspects of standard urban economics and the new economic geography literatures. For the empirical analysis, we constructed a dataset of 123 Brazilian agglomerations, and estimate aspects of the demand and supply side as well as a reduced form specification that describes city sizes and their growth. Our main findings are that increases in rural population supply, improvements in inter-regional transport connectivity and education attainment of the labor force have strong impacts on city growth. We also find that local crime and violence, measured by homicide rates impinge on growth. In contrast, a higher share of private sector industrial capital in the local economy stimulates growth. Using the residuals from the growth estimation, we also find that cities who better administer local land use and zoning laws have higher growth. Finally, our policy simulations show that diverting transport investments from large cities towards secondary cities do not provide significant gains in terms of national urban performance.
    JEL: O R
    Date: 2005–08
  3. By: T. Broekel; T. Brenner
    Abstract: A growing body of work emphasizes the role that the spatial component plays in the in the innovation process. These perspectives brought the region's infrastructure and its endowment with crucial factors into the focus of research. Given that these factors do significantly influence the innovativeness of local firms, it is important to identify precisely which regional characteristics matter. The aim of this paper is to identify a number of key influences out of a multitude of structural factors that are thought to influence the firm's innovation activity. We examine more than eighty variables that approximate the financial, geographical and social-economic factor endowment of a region. The variables are tested with a linear and log - linear model. The two staged procedure examines the variable's bivariate correlation with patent data of five industries. Based on these outcomes multivariate regression models are applied in the second stage. The results for the different models are compared and their advantages and disadvantages are discussed. We find a strong impact of economic agglomeration, extramural science institutions and human capital. In the case of human capital, especially the graduates at the technical colleges are collocated with high regional innovativeness. Furthermore, significant differences are observed for the five industries and for using the two models.
    Date: 2005–08
  4. By: José Ignacio García Pérez (Centro de Estudios Andaluces); Yolanda Rebollo Sanz (Universidad Pablo de Olavide)
    Abstract: We study the use of permanent and temporary contracts across Spanish regions during the period 1995-2001. First we show that there are significant differences among the regional rates of permanent employment and that these differences tend to persist over time. To understand the underlying factors behind these observed differences we estimate a binary choice model for the individual probability of having a permanent contract, taking advantage of the panel data dimension of the Spanish Labour Force Survey. Our main results are that unit labour cost differentials, and thus labour productivity and total labour cost differentials, partially explain the divergence of regional permanent employment rates. Moreover, compared to the influence of regional fixed effects and other possible explanations such as sector specialisation or the presence of small firms in the region, unit labour costs explain more than two thirds of the observed variance in the permanent employment rate across Spanish regions, once all the relevant heterogeneity is taken into account .
    Keywords: Temporary Employment, Unit Labour Costs, Random Effects, Spanish Regions.
    JEL: C23 J23 J31 J41
    Date: 2005
  5. By: Marcy Burchfield; Henry G. Overman; Diego Puga; Matthew A. Turner
    Abstract: We study the extent to which US urban development is sprawling and consider what determines differences in sprawl across space. Using remote-sensing data to track the evolution of land use on a grid of 8.7 billion 30x30 metre cells, we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling. On this measure, while the extent of sprawl remained roughly unchanged between 1976 and 1992, it varied dramatically across metropolitan areas. Ground water availability, temperate climate, rugged terrain, decentralized employment, early public transport infrastructure, uncertainty about metropolitan growth, and unincorporated land in the urban fringe all increase sprawl.
    JEL: R14 O51
  6. By: Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Recent empirical research by, for example, Audretsch and Fritsch (1999) and Armington and Acs, (2002) shows that regional determinants of new firm formation differs between industries. It has also been suggested that a large part of the regional variation of new firm formation can be explained by differences in industrial structure. This paper reinvestigates the regional determinants of entry and exit considering these findings. The empirical analysis is performed using data on Swedish firm entry and exit rates for 1997-2001. It is shown that on average about 0.5 to 2.7 percent of the regional variation in entry and exit rates remains to be explained, after controlling for differences in industrial structure, but that there is substantial regional variation. A majority of the firms in the 47 industries investigated are sensitive to unobserved regional characteristics, such as regional policy when deciding to enter or exit a particular region. Agglomeration and the size structure in the particular industry and region are factors that are found to influence entry and exit rates in almost all industries.
    Keywords: Entry; exit; industry structure; regions
    JEL: L10 R12
    Date: 2005–08–12
  7. By: Jean Dubé; André Lemelin
    Abstract: Cet article présente une application expérimentale de la méthode d'estimation des flux d'échanges entre des régions par la minimisation de l'entropie croisée (mesure de Kullback-Leibler). Les flux interrégionaux ont été estimés pour 31 catégories de biens et services, entre trois régions du Québec en 1992: les régions métropolitaines de Montréal et de Québec et le Reste-du-Québec. La méthode, d'inspiration bayesienne, a permis de dégager des flux interrégionaux respectant les totaux marginaux provenant de matrices de comptabilité sociale régionales préexistantes, à partir de données sur les flux de transport jouant le rôle de distribution a priori./In this paper, we report on an experimental application of Kullback-Leibler cross-entropy minimization to estimate trade flows between regions. Interregional trade flows were estimated for 31 categories of goods and services, between three regions of the Province of Québec in 1992: the Montréal and Québec metropolitan areas, and the Rest-of-Québec. With this bayesian-style method, we were able to obtain interregional flows that respect the marginal totals taken from pre-existing regional social accounting matrices, using transportation flow data as a priori distributions.
    Keywords: Estimation, commerce interrégional, flux de transport, minimisation de l'entropie croisée/interregional trade, transport flows, cross-entropy minimization
    JEL: R12 R13 C13 C81
    Date: 2005
  8. By: Piil Damm, Anna (Department of Economics, Aarhus School of Business)
    Abstract: This paper exploits a dispersal policy for refugee immigrants to <p> estimate the importance of local and regional factors for refugees’ location <p> preferences. <p> The main results of a mixed proportional hazard competing risks <p> model are that placed refugees react to high regional unemployment <p> and lack of a local immigrant population by migrating to large municipalities. <p> Lack of local fellow countrymen, however, increases the <p> exit rate to medium-sized as well as large municipalities. This finding <p> is likely to be a result of the dispersal policy. Finally, refugees react <p> strongly to assignment to small municipalities by migrating mainly to <p> medium-sized municipalities.
    Keywords: Location Preferences; Internal Migration; Immigrants; Dispersal Policies; Duration Analysis
    JEL: J15 R15
    Date: 2005–09–02
  9. By: Antoni Calvo-Armengol; Yannis M. Ioannides
    Abstract: Research in sociology and economics point to important role for social networks in labor markets. Social contacts mediate propagation of rich and reliable information among indi- viduals and thus help workers find jobs and employers find employees. Recent theoretical advances show that for agents connected through networks employment is positively cor- related across time and agents, unemployment exhibits duration dependence, and inequal- ity can persist. Recent empirical findings underscore nonlinearities in social interactions and potentially important effects of self-selection. Socioeconomic characteristics can explain substantial spatial dependence in unemployment.
    Keywords: networks, labor markets, social connections, unemployment, proximity, spatial dependence, information networks, neighborhoods and jobs
    JEL: D85 A14 J64 J31 J70 L14
    Date: 2005
  10. By: Alberto Dalmazzo (University of Siena); Guido de Blasio (Bank of Italy)
    Abstract: Recent literature has aimed at evaluating human capital externalities by estimating the effect of human capital on wages at urban level. We argue that this methodology might not identify properly human capital spillovers. We consider a general equilibrium model based on Roback (1982) where both wages and rents are simultaneously determined at the local level. We show that human capital externalities cannot be identified unless the joint effect of local human capital on both wages and rents is considered. Empirically, we study the effects of local human capital on household-level rents and individual-level wages for a sample of Italian local labour markets. Our results show a positive and robust effect of local human capital on rents. This unambiguously demonstrates that the concentration of human capital at the local level generates positive externalities. As for the relative importance of consumption and production externalities, our results suggest that the two effects have a similar impact on wages.
    Keywords: human capital; externalities; local markets
    JEL: R0 J0 I2
    Date: 2005–06
  11. By: Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: FDI inflows have expanded rapidly during the past decade. This paper analyses if such inflows do introduce new characteristics of the innovation systems at national and regional levels. The paper studies two phenomena. First, what novelties are brought into the host region (country) when FDI inflows occur? Second, what are the consequences for the innovation intensity, technology transfer and economic performance of firms in a regional (national) economy that experiences FDI inflows? These issues are assessed by examining the characteristics of foreign multinationals and comparing them with the characteristics of multinational, uninational and non-affiliate firms, respectively. The analyses control for location, examine regional impacts, and are based on CIS data (Community Innovation Survey III). The paper contributes to earlier studies in two important ways. First, it compares FDI firms with three other distinct types of corporate structure. Second, it combines results from both parametric and non-parametric estimations. The results indicate that FDI inflows in an unambiguous way renew the local economy when acquiring or replacing domestic multi-unit firms (uninationals). Compared to other types of corporate structure, FDI firms do not seem to improve innovation characteristics of the local economy.
    Keywords: FDI; technology transfer; innovation; regional economy
    JEL: C21 D21 F23 L23 R11
    Date: 2005–08–12
  12. By: David Card; Ethan G. Lewis
    Abstract: Mexican immigrants were historically clustered in a few cities, mainly in California and Texas. During the past 15 years, however, arrivals from Mexico established sizeable immigrant communities in many "new" cities. We explore the causes and consequences of the widening geographic diffusion of Mexican immigrants. A combination of demand-pull and supply push factors explains most of the inter-city variation in inflows of Mexican immigrants over the 1990s, and also illuminates the most important trend in the destination choices of new Mexican immigrants – the move away from Los Angeles. Mexican inflows raise the relative supply of low-education labor in a city, leading to the question of how cities adapt to these shifts. One mechanism, suggested by the Hecksher Olin model, is shifting industry composition. We find limited evidence of this mechanism: most of the increases in the relative supply of low-education labor are absorbed by changes in skill intensity within narrowly defined industries. Such adjustments could be readily explained if Mexican immigrant inflows had large effects on the relative wage structures of different cities. As has been found in previous studies of the local impacts of immigration, however, our analysis suggests that relative wage adjustments are small.
    JEL: J61
    Date: 2005–08
  13. By: María M. Aguilera Díaz
    Abstract: El Departamento de Sucre basa su economía principalmente en la ganadería y los servicios sociales. Sus características geográficas y climáticas son variadas, con unas zonas ricas en agua pero anegadizas, donde no existen sistemas de drenajes, y otras secas y carentes de sistemas de riego. Este trabajo examina los factores que han frenado su desarrollo económico y social, encontrando una producción primaria con bajo valor agregado y deficiente infraestructura física en servicios públicos, vías y comunicaciones. Los indicadores sociales y económicos han mejorado en el transcurso de los últimos años pero están rezagados con relación a los promedios del país. Existe un gran potencial en la producción agroindustrial, microempresarial y artesanal, pero los productores carecen de recursos, presentan deficiencias en la administración de sus negocios y tienen alta intermediación. Las finanzas públicas del departamento y sus municipios dependen en alta proporción de las transferencias de la Nación, por la poca dinámica de las actividades económicas locales y el alto nivel de pobreza de la población. Para lograr un mayor desarrollo es indispensable mejorar la infraestructura económica (vías, aeropuertos, sistemas de drenaje y riego, entre otras) con la cual se aumentará la productividad de las actividades actuales y se atraerá nuevas inversiones productivas.
    Keywords: Economía regional,
    JEL: R10
    Date: 2005–08–30
  14. By: Piil Damm, Anna (Department of Economics, Aarhus School of Business); Rosholm, Michael (Department of Economics, University of Aarhus)
    Abstract: Do dispersal policies on refugee immigrants promote their labour <p> market outcomes? To investigate this we estimate the effects of location <p> characteristics and the average effect of geographical mobility <p> on the hazard rate into first job of refugee immigrants subjected to <p> the Danish Dispersal Policy 1986-1998. We correct for selection into <p> relocation to another municipality by joint estimation of the duration <p> of the first non-employment spell and time until relocation. <p> We find, first, that the hazard rate into first job is decreasing in the <p> local population size and the local share of immigrants. These findings <p> support dispersal policies. Second, on average geographical mobility <p> had large, positive effects on the hazard rate into first job, suggesting <p> that restrictions on placed refugees’ subsequent out-migration would <p> hamper labour market integration of ref
    Keywords: Dispersal Policies on Refugees; Employment Effects; Migration
    JEL: J15 J61 J64
    Date: 2005–09–02
  15. By: John Y. Campbell; João F. Cocco
    Abstract: Housing is a major component of wealth. Since house prices fluctuate considerably over time, it is important to understand how these fluctuations affect households' consumption decisions. Rising house prices may stimulate consumption by increasing households' perceived wealth, or by relaxing borrowing constraints. This paper investigates the response of household consumption to house prices using UK micro data. We estimate the largest effect of house prices on consumption for older homeowners, and the smallest effect, insignificantly different from zero, for younger renters. This finding is consistent with heterogeneity in the wealth effect across these groups. In addition, we find that regional house prices affect regional consumption growth. Predictable changes in house prices are correlated with predictable changes in consumption, particularly for households that are more likely to be borrowing constrained, but this effect is driven by national rather than regional house prices and is important for renters as well as homeowners, suggesting that UK house prices are correlated with aggregate financial market conditions.
    JEL: D1 G1
    Date: 2005–08
  16. By: G. Buenstorf; S. Klepper
    Abstract: We use new data on the location and background of entrants into the U.S. tire industry to analyze the factors that caused the industry to be so regionally concentrated around Akron, Ohio, a small city with no particular advantages for tire production. We analyze the states where firms entered and for the Ohio entrants the counties where they originated and entered, and we conduct various analyses of how proximity to other tire firms and to demanders affected the longevity of tire producers. We also examine how the heritage of the Ohio entrants influenced their longevity. Our findings suggest that the Akron tire cluster grew primarily through a process of organizational reproduction and heredity rather than through agglomeration economies, as has been commonly posited by scholars of the industry.
    Date: 2005–08
  17. By: Jeffrey R. Kling; Jeffrey B. Liebman; Lawrence F. Katz
    Abstract: Families, primarily female-headed minority households with children, living in high-poverty public housing projects in five U.S. cities were offered housing vouchers by lottery in the Moving to Opportunity program. Four to seven years after random assignment, families offered vouchers lived in safer neighborhoods that had lower poverty rates than those of the control group not offered vouchers. We find no significant overall effects of this intervention on adult economic self-sufficiency or physical health. Mental health benefits of the voucher offers for adults and for female youth were substantial. Beneficial effects for female youth on education, risky behavior, and physical health were offset by adverse effects for male youth. For outcomes exhibiting significant treatment effects, we find, using variation in treatment intensity across voucher types and cities, that the relationship between neighborhood poverty rate and outcomes is approximately linear.
    JEL: H43 I18 I38 J38
    Date: 2005–08
  18. By: Pastor Enrique Quintero Carvajal; Jorge Edgar Silva Veloza
    Abstract: En este documento se describe el comportamiento de la deuda pública con el sector financiero de 15 municipios del Tolima, así como el servicio de la misma (amortizaciones a capital e intereses) y su relación con otras variables: PIB regional, rentas y gastos. Para ello se utilizaron como fuentes estadísticas las ejecuciones presupuestales de ingresos y gastos, los informes financieros de la contraloría municipal, departamental y nacional, como también, las bases de datos del Ministerio de Hacienda y Crédito Público, la Superintendencia Bancaria y la Contaduría General de la Nación. Los resultados reflejan unos elevados niveles de endeudamiento de estos municipios, que disminuyeron en los dos últimos años del período que abarca el estudio, en virtud de las medidas y apoyos otorgados por el estado colombiano; sin embargo, aún persisten niveles preocupantes en su situación de endeudamiento.
    Keywords: Deuda Pública financiera, .
    JEL: H63
    Date: 2005–01–30
  19. By: Hutlkrantz, Lars (Department of Business, Economics, Statistics and Informatics); Armelius, Hanna (Uppsala universitet)
    Abstract: A full-scale road pricing seven months trial will be performed in Stockholm in 2006. The road tolls are bundled with major improvements of public transport. The trial will be followed by a local referendum. <p> We conduct numerical simulations with a model of modal choice to estimate the welfare effects of road tolls on commuters crossing the toll zone. We find that in the absence of revenue recycling, few commuters gain from the road-toll reform. However, the fraction who gain rises considerably when public transport is improved as planned in Stockholm.
    Keywords: Congestion charges; road tolls; distributional effects; modal choice
    JEL: H23 H54 R48
    Date: 2005–08–12
  20. By: Helmut Rainer; Thomas Siedler
    Abstract: In most industrialized countries, more people than ever are having to cope with the burden of caring for elderly parents. This paper formulates a model to explain how parental care responsibilities and family structure interact in affecting children's mobility characteristics. A key insight we obtain is that the mobility of young adults crucially depends on the presence of a sibling. Our explanation is mainly, but not exclusively, based on a sibling power effect. Siblings compete in location and employment decisions so as to direct parental care decisions at later stages towards their preferred outcome. Only children are not exposed to this kind of competition. This causes an equilibrium in which siblings not only exhibit higher mobility than only children, but also have better labor market outcomes. Using data from the German Socio-Economic Panel Study (SOEP) and from the American National Survey of Families and Households (NSFH), we find strong evidence that confirms these patterns. The implications of our results are then discussed in the context of current population trends in Europe and the United States.
    Date: 2005–09–05
  21. By: anonymous
    Abstract: Small businesses and microenterprises have an important role to play in low- and moderate-income communities. Often they are the engines of growth in these neighborhoods.
    Keywords: Small business ; Economic development
    Date: 2004
  22. By: Piil Damm, Anna (Department of Economics, Aarhus School of Business)
    Abstract: This paper investigates whether the Danish Dispersal Policy on <p> new refugee immigrants carried out from 1986 to 1998 can be regarded <p> as a natural experiment. Were refugees randomly assigned to <p> a location? <p> The main findings are as follows. First, around 90% of new refugees <p> were assigned to a location. Second, the dispersal policy successfully <p> distributed new refugees equally across locations relative to the number <p> of inhabitants in a location. Third, the actual settlement may <p> have been influenced by six refugee characteristics. I conclude that <p> the initial location of new refugees 1986-1998 may be regarded as <p> random, when controlling for family status, need of treatment, educational <p> needs, location of close family and friends and nationality at <p> the time of immigration as well as year of immigration.
    Keywords: Dispersal Policies; Refugee Immigrants; Natural Experiments
    JEL: J15 R23
    Date: 2005–09–02

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