nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒01‒24
39 papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Monocentric Versus Polycentric Models in Urban Economics By Tomoya Mori
  2. Compensation of Regional Unemployment in Housing Markets By Wouter Vermeulen; Jos van Ommeren
  3. From 'territory' to 'city': the conceptualisation of space in Italy since 1950 By Antonio G. CALAFATI
  4. Spatial Activity and Labour Market Patterns By Giovanni Russo; Aura Reggiani; Peter Nijkamp
  5. Promoting Industrial Clusters: Evidence from Ireland By Frances Ruane; Anne Marie Gleeson; Julie Sutherland
  6. Convergência Regional na União Europeia: Evidência para o período 1990 – 2001 By Ana Filipa Couceiro Pereira
  7. Regional Convergence, Structural Funds and the Role of Agricolture in the EU. A Panel-Data Approach. By Stefania BUSSOLETTI; Roberto ESPOSTI
  8. Foreign direct investment and agglomeration: evidence from Italy By Raffaello Bronzini
  9. What’s In a City?: Understanding the Micro-Level Employer Dynamics Underlying Urban Growth By R. Jason Faberman
  10. Regional Policy from a Supra-Regional Perspective By Ugo FRATESI
  11. Fiscal policy, credit availability and financing of regional policies in Brazil By Frederico G. Jayme Jr.; Marco Crocco
  12. Location of manufacturing FDI in Hungary: How important are inter-company relationships? By Gábor Békés
  13. Regional Economies, Innovation and Competitiveness in a System Dynamics Representation By Ugo FRATESI
  14. Analysing EU Accession Effects in Romania by a Multiregional I-O Model By Andrea BONFIGLIO
  15. Growth and Convergence across the U.S.: Evidence from County-Level Data By Matthew J. Higgins; Daniel Levy; Andrew T. Young
  16. Regional Income Stratification in Unified Germany Using a Gini Decomposition Approach By Joachim R. Frick; Jan Goebel
  17. Migration and Labour Market Differences: The Case of Wales By Stephen Drinkwater; David Blackaby
  18. Crime, Location and the Housing Market By Zenou, Yves
  19. Location in a vertically differentiated industry By Emmanuele, BACCHIEGA; Antonio, MINNITI
  20. The Study of Competition Among Local Areas: A Functional Analysis Approach By Francesco CHELLI
  21. Zoning, TDRs, and the Density of Development By Walls, Margaret; McConnell, Virginia; Kopits, Elizabeth
  22. Environmental Contamination and House Values By Katherine Kiel
  23. Location Efficient Mortgages: Is the Rationale Sound? By Krupnick, Alan; Blackman, Allen
  24. The Ambivalent Role of Mimetic Behaviors in Proximity Dynamics: Evidences on the French “Silicon Sentier” By Jérome VICENTE (LEREPS-GRES); Yan Dalla PRIA (CSO – CNRS); Raphaël SUIRE (CREM – CNRS)
  25. Inter-Regional Redistribution in Sweden: A Survey of the Literature and a Call for Further Enquiry By Almenberg, Johan
  26. The Effects of Potential Land Development on Agricultural Land Prices By Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
  27. Diferencias sociales y regionales en el ingreso laboral de las priicipales ciudades colombianas, 2001-2004 By Julio Romero
  28. Measuring Marginal Congestion Costs of Urban Transportation: Do Networks Matter? By Safirova, Elena; Gillingham, Kenneth
  29. General Equilibrium Benefit Transfers for Spatial Externalities: Revisiting EPA's Prospective Analysis By Smith, V. Kerry; Banzhaf, H. Spencer; Walsh, Randy
  30. Is Britain Pulling Apart? Area Disparities in Employment, Education and Crime By Stephen Gibbons; Anne Green; Paul Gregg; Stephen Machin
  31. The Determinants of Economic Development Insitution or Geography ? By Andrea PRESBITERO
  32. La terciarización de las estructuras económicas regionales en Colombia By Jaime Bonet
  33. A Neighborhood-Level View of Riots, Property Values, and Population Loss: Cleveland 1950-1980 By William J. Collins; Fred H. Smith
  34. House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics By Steven C. BOURASSA; Donald R. HAURIN; Jessica L. HAURIN; Martin HOESLI; Jian SUN
  35. Tecnologia e dinamica dei vantaggi comparati: un confronto fra quattro regioni italiane By Chiara Bentivogli; Fabio Quintiliani
  36. Knowledge externalities and growth in peripheral regions: introductory notes By Fabiana Santos; Marco Crocco; Frederico G. Jayme Jr
  37. Determinants of Land-Use Change In the United States 1982-1997 By Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
  38. Estimating the Welfare Effect of Congestion Taxes: The Critical Importance of Other Distortions within the Transport System By Parry, Ian; Bento, Antonio
  39. General Geographical Economics Model with Congestion By Charles van Marrewijk

  1. By: Tomoya Mori (Institute of Economic Research, Kyoto University)
    Abstract: This article overviews the development of the formal modelling framework for the urban spatial structure which started in 1960s and grew dramatically thereafter. Modelling in the 1970s focused on the endogenous formation of the central business district within a city. Then richer polycentric city models were developed in 1980s, where the number, location and spatial extent of the business districts are determined endogenously. The emergence of the new economic geography in 1990s provided a framework capable of explaining the spatial distribution of cities (rather than the business districts within a city) and their industrial structure in a general location-equilibrium model.
    Date: 2006–01
  2. By: Wouter Vermeulen (CPB Netherlands Bureau for Economic Policy Analysis, The Hague); Jos van Ommeren (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
    Abstract: Why are regional unemployment differentials in Europe so persistent if, as the wage curve literature demonstrates, there is no compensation in labour markets? We hypothesize that workers in high-unemployment regions are compensated in housing markets. Modelling regional unemployment differentials as a consequence of centralized wage bargaining, we show that clearing of land markets may undo the incentive for workers to migrate to low-unemployment regions in general equilibrium. The compensating differentials hypothesis is tested on city-level data for several countries. Controlling for variation in income and amenities, housing is found to be about 3 percent less expensive on average in cities where unemployment is 10 percent up. An analysis of housing demand survey data, which takes account of housing heterogeneity, yields a similar negative relationship. The magnitude of the income effect generated by this compensating differential is consistent with a -0.10 wage curve elasticity. These findings weaken the case for regional support programs.
    Keywords: regional unemployment; housing markets; wage curve; compensating differentials; hedonic models; regional policy
    JEL: R23 R13 J64
    Date: 2005–10–13
  3. By: Antonio G. CALAFATI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The paper argues that the way in which social scientists and policy-makers have conceptualised the Italian territory has significantly changed since the 1950s as a consequence of methodological shifts and attempts to capture the changing territorial organisation of the economy brought about by the structural transformation of the production and consumption process. In retrospect, one can in fact discern a conceptual trajectory from the standard 'Northern Italy'/'Southern Italy' partition, which prevailed until the 1970s, to an interpretation of the Italian territory as a pattern of local systems which slowly emerged in the subsequent decades. The paper suggests that the concept of 'local system', if correctly interpreted, may finally lead to rediscover cities as the fundamental elements of the territorial organisation of the economic process in Italy. However difficult economists may find to insert 'the city' in the categorical and theoretical framework of economics, it seems necessary to assign to the features of urban organisation of the Italian society the economic importance they indeed have. By moving from a modern interpretation of the concept of city - for instance by giving adequate consideration to the fact that in Western economies practically all cities are 'dispersed cities' and functional rather than administrative borders are relevant - one can reach the conclusion that most local systems are in fact cities. This way of looking at the Italian territory has important consequences. For instance, it reinstates urban external economies and dis-economies in the position they deserve in determining the development trajectory of the Italian economy. This perspective, moreover, re-assigns to the main Italian urban systems the economic role that they have indeed played in recent decades with regard to the innovation and accumulation processes, and highlights the key position that large cities have in reacting to the external shocks that accompany the changing international division of labour. Moreover, if the economic importance of cities is not acknowledged, it is questionable whether effective regional and national development policies can be devised. The critical-historical analysis of the conceptualisation of the Italian territory since the 1950s conducted in this paper, highlighting the conceptual barriers which have impeded appreciation of the role of cities, may prove functional to a paradigmatic shift which puts cities at the centre of the stage - a shift which is also in line with the new orientation toward cities one finds in the EU territorial policies.
    JEL: O12 O18 R10 R11
    Date: 2005–09
  4. By: Giovanni Russo (IRES FvG, Trieste); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit Amsterdam)
    Abstract: The spatial activity patterns of firms in a multi-regional system are closely connected with the structure and evolution of regional labour markets. Based on an extensive data set (cross-section) on commuting flows in Germany, this paper aims to identify the relationship between entrepreneurial activity and spatial labour markets, by employing in particular the concept of entrepreneurial city. A network connectivity model is adopted to assess connectivity patterns, using the power-law and exponential law as a statistical test framework, in order to detect the presence of economic activity hubs that may resemble the concept of entrepreneurial cities. Various results are presented and interpreted in the final part of the paper.
    Keywords: Network; Commuting; Entrepreneurship
    JEL: O
    Date: 2005–12–06
  5. By: Frances Ruane; Anne Marie Gleeson; Julie Sutherland
    Abstract: This paper analyses the spatial concentration and sectoral specialisation of local enterprises (LEs) and multinational enterprises (MNEs) in Ireland. Entropy indices are used as indicators of spatial and sectoral clustering in Irish manufacturing. Correlation coefficients are calculated to estimate the co-location patterns of LEs and MNEs, allowing an investigation of the overall impact of stated industrial and regional policy goals on the Irish manufacturing sector. The pattern of spatial changes found suggests that market forces were already driving enterprises out of more concentrated locations prior to the introduction of policies to promote greater spatial dispersion in the late 1990s. MNEs have become more sectorally specialised over the period, which is not surprising as policy is deliberately selective in attracting MNEs to key high tech manufacturing sectors. The less concentrated sectoral pattern amongst LEs enterprises is consistent with general restructuring in Irish manufacturing from lower- to higher-tech sectors, and the high sectoral correlation for high-tech MNEs and LEs suggests that LEs are following MNEs into the same sectors.
    Keywords: geographic concentration, sectoral specialisation, entropy indices, MNEs, LEs, public policy
    JEL: L60 R12 R58
    Date: 2005–12–15
  6. By: Ana Filipa Couceiro Pereira (Universidade de Aveiro)
    Abstract: This paper tests the convergence hypothesis across the EU NUTS II regions between 1990 and 2001. It does that using the test of dispersion and estimating “Barro-type” regressions that relate economic growth to the initial income and other variables. It identifies the causes that can explain regional differences in output per capita, productivity and output per working-age person. The results show that there is convergence of output per capita and productivity, but not of output per working-age person. This is due to the fact that the evolution of demography plays in favour of convergence while employment does not. The paper also tests whether the eligibility for “objective 1” promotes faster convergence of these regions, but there is no evidence of that being the case. There is also evidence of conditional convergence among EU regions, with a positive impact of neighbouring-region dynamism in the speed of regional convergence, highlighting the importance of infrastructure investment in peripheral regions.
    Keywords: Convergence, European regions, structural funds, geographical location
    JEL: O40 O52
    Date: 2005–12
  7. By: Stefania BUSSOLETTI; Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: This article investigates the impact of structural funds expenditure on EU regions by estimating a conditional convergence econometric model. According to this model, regional convergence is affected by both the policy treatment and the regional economic structure proxied by the agriculture employment share, which affects regional steady state level by influencing its aggregate productivity. The convergence model is specified in a dynamic panel-data form on a dataset of 206 NUTS II EU15 regions observed over more than 10 years (from 1989 to 2000). A GMM estimation is applied to obtain consistent estimates of both the á parameter and the impact of the regional policies and agriculture employment share.
    Keywords: GMM estimation, agriculture employment, panel-data, regional convergence, structural funds
    JEL: O13 Q10 R11 R58
    Date: 2004–10
  8. By: Raffaello Bronzini (Banca d'Italia)
    Abstract: A number of empirical studies have analyzed the effect of agglomeration on multinational investment, verifying whether the agglomerated areas attract foreign direct investment inflows. Despite the large number of papers, no systematic attempt has been made to disentangle whether FDI are attracted by the concentration of firms within the same sector (specialization) or within different sectors (diversity). Furthermore, the question whether firm size in the host area influences multinational investment is still unanswered. This paper provides empirical evidence of the role of agglomeration economies in attracting foreign direct investments within Italian regions and provinces, distinguishing between specialization and diversity, and of the role of firm size in foreign investors’ choices. We employ a new territorial data set on foreign direct investment collected by the Italian Foreign Exchange Office for industrial and service sectors. We find strong evidence that specialized geographical areas attract FDI, whereas diversified areas do so only for industrial sectors; finally, there is little evidence that firm size has an impact on FDI since, if anything, only big firms in southern regions appear to have a positive effect on foreign investors’ decisions.
    Keywords: foreign direct investment, agglomeration economies, regional economics
    JEL: F21 R12 R30
    Date: 2004–12
  9. By: R. Jason Faberman (U.S. Bureau of Labor Statistics)
    Abstract: This paper synthesizes the literatures on labor dynamics and urban growth and agglomeration by presenting new evidence on the micro-level establishment dynamics of metropolitan areas. I explore how the patterns of job reallocation and entry and exit affect the growth and composition of these areas. I find that high-growth metropolitan areas have high rates of job and establishment turnover, primarily though higher rates of gross job creation and establishment entry, and have a relatively young distribution of establishments. Variations in the age distribution and differences in the entry and exit patterns of young establishments account for a sizeable portion of regional differences in labor dynamics and growth, even after controlling for regional differences in industry composition. These results suggest that variations in the age distribution and the dynamics that lead to such variations are important factors in understanding urban growth and agglomeration.
    Keywords: Job Reallocation; Urban Growth and Agglomeration; Firm Dynamics
    JEL: E24 J63 R11
    Date: 2005–12
  10. By: Ugo FRATESI
    Abstract: This paper introduces a new 2-country 4-region model in order to study the possible trade-offs arising between national efficiency and interregional equity, differentiating for different strengths of agglomeration economies and different regional productivities. In this static model the national policy maker can affect entrepreneurship through the set-up costs of firms. It is evidenced that, for countries composed of identical regions, spatially dispersed allocations of public productive expenditure are more efficient with low agglomeration economies whereas spatially concentrated allocations are more efficient with high agglomeration economies. As the regions become different, however, unbalanced allocations of public productive expenditure;towards the most advanced region become more efficient also in case of relatively weak agglomeration economies, until, for regions sufficiently different, the most efficient allocation of public productive expenditure is always to;concentrate it in the most advanced territories. For this reason, if some sort of lump-sum compensating mechanisms are available, short-sighted national policy makers, not taking into account long-run growth and factor mobility, can rationally decide to support the competitiveness of the already more-productive regions and transfer income to the lagging ones, a behaviour which is shown to have significant similarities with two real cases.
    Keywords: agglomeration economics, interregional equity, national efficiency, regional policy
    JEL: E61 H79 R13 R58
    Date: 2005–11
  11. By: Frederico G. Jayme Jr. (Cedeplar-UFMG); Marco Crocco (Cedeplar-UFMG)
    Abstract: This paper aims at analyzing regional development in Brazil regarding its financial conditions. It departs from the features of the federalism and decentralization in Brazil, as well as the state and local expenditures. We intends to investigate the role of the federalism and decentralization after the recentralization of taxes and budget in Brazilian economy. Conclusions highlight the importance of financial sector as one of the influential aspects of regional imbalances in Brazil.
    Keywords: regional development, federalism, tax burden
    JEL: R11 H70 H77
    Date: 2005–12
  12. By: Gábor Békés (Institute of Economics - Hungarian Academy of Sciences and Central European University)
    Abstract: In a new economic geography framework with input-output linkages, this study analyses decisions made by foreign firms about their location within Hungary. These firm-to-firm contacts are modelled by creating several corporate customer and supplier access measures for all new foreign corporations. In order to see the impact of these variables other forces of agglomeration such as distance to Western European markets and dispersion forces such as high wages are taken into account. Investigation is carried out on a small-to-medium sized European economy that has just gone through economic transition involving almost unprecedented rapid market liberalisation. A rich dataset of corporate tax returns of Hungarian firms between 1992 and 2002 as well as annual labor surveys are used to get location, sales and wage data. Various econometric specifications of both discrete choice and count data models are applied to provide robustness of results that may be crucial when working with firm level data.
    Keywords: economic geography, industrial location, FDI, regional policy, discrete choice models
    JEL: F23 R3 R12 C35
    Date: 2005
  13. By: Ugo FRATESI
    Abstract: The System Dynamics methodology is used in this article as unifying approach in order to show how a number of theories about the performance of territories developed in the past 20 years can integrate the one with the other; to demonstrate this, a model of local economy coherent with these schools is constructed and simulated. According to these theories, the ability to produce and use knowledge is at the centre of regional competitiveness in the advanced world; the model and the paper illustrate the elements of the local economic system and how they have to work coherently towards the continuous process of innovation, needed to be successful. The model also shows in a new framework how, due to the cumulative nature of this innovation process, it is possible to obtain equilibria with regional income di®erentiation, even in the presence of identical territories. When this is the case, structural policies, aiming to allow lagging regions to better innovate and/or imitate external knowledge, are appropriate.
    Keywords: competitiveness, income disparities, innovation, learning, regional production systems, system dynamics
    JEL: B52 O3 R11 R58
    Date: 2004–02
  14. By: Andrea BONFIGLIO
    Abstract: The objective of this article is to assess labour income and employment effects in Romania coming from development policies defined in the proposed 2007-09 EU accession financial package. The methodology used is based on a multiregional I-O model, which allows capturing specificities and interrelationships among the 8 Romanian development regions and to know impact distribution on the territory. The I-O model is constructed from a multiregional I-O table derived by a three-stage estimation method. Impact is mapped through a Geographic Information System. Main results show that EU accession will lead to large positive effects in Romania, which vary according to the region considered. In this connection, the South and the North-East regions are those on which benefits tend to concentrate. Finally, policy would seem to reduce regional and sectoral income disparities, leading to more balanced development. On the contrary, in terms of employment, policy would increase divergences, albeit, from an analysis of single region economy, a general tendency to a reduction of sector disparities is noticed.
    Keywords: EU accession, development policies, multiregional I-O model, policy impact
    JEL: C82 R15 R58
    Date: 2005–02
  15. By: Matthew J. Higgins; Daniel Levy; Andrew T. Young
    Abstract: We use U.S. county data (3,058 observations) and 41 conditioning variables to study growth and convergence. Using OLS and 3SLS-IV we report on the full sample and metro, non-metro, and 5 regional samples: (1) OLS yields convergence rates around 2 percent; 3SLS yields 6–8 percent; (2) convergence rates vary (e.g., the Southern rate is 2.5 times the Northeastern rate); (3) federal, state and local government negatively correlates with growth; (4) the relationship between educational attainment and growth is nonlinear; and (5) finance, insurance & real estate industry and entertainment industry positively correlates with growth while education employment negatively correlates.
    Date: 2005–09
  16. By: Joachim R. Frick; Jan Goebel
  17. By: Stephen Drinkwater (University of Surrey, WELMERC, University of Wales Swansea and IZA Bonn); David Blackaby (WELMERC, University of Wales Swansea and University of Swansea)
    Abstract: The migration of labour can affect economies in several ways. This paper focuses on two of the economic impacts of migration in the context of the recent Welsh experience. Firstly, since migration is a key aspect of labour market flexibility, it is a mechanism through which local and regional labour market differences can be reduced. However, it is found that the most deprived parts of Wales have the lowest levels of migration and that both in and outmigration rates are negatively correlated with unemployment and sickness rates. Secondly, the characteristics of in and out-migrants have important implications for the current and future performance of local and regional economies. Using a variety of data sources, it is shown that people leaving Wales are younger and more educated than migrants to Wales. Furthermore, younger and more educated Welsh individuals appear to have a higher willingness to move than their counterparts living elsewhere in Britain.
    Keywords: migration, local and regional labour markets, Wales
    JEL: J61 R23
    Date: 2004–08
  18. By: Zenou, Yves
    Abstract: We highlight the role of commuting cost, location and housing market in crime decision. By assuming that all crimes are committed in the central business district and that criminals create both positive and negative externalities to each other, we find that high wages or large levels of police resources are a natural way to reduce crime. We also find that bigger cities experience higher levels of crime because of the fiercer competition in the housing market. Finally, we show that reducing commuting costs can also reduce crime because the resulting decrease in housing prices is lower for workers than for criminals.
    Keywords: commuting cost; housing market; localized crime
    JEL: J15 K42 R14
    Date: 2005–12
  19. By: Emmanuele, BACCHIEGA; Antonio, MINNITI (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: We analyze a model of a vertically differentiated duopoly with two regions. These two locations differ for the market size or for the distribution of the willingness to pay for quality of their consumers. Firms sequentially choose to settle in one region and then simultaneously compete in prices, selling their products both on the local market and on the foreigner one. We show that the decision whether to agglomerate or not crucially depends on the extent of regions’ asymmetries, but, counter intuitively, there are parametric configurations in which the model predicts that the leader (the first firm choosing location) settles either in the poorer or in the smaller region, leaving the other one to the follower.. Welfare analysis completes the paper.
    Keywords: Regions; Vertical Differentiation; Oligopoly
    JEL: D43 L13 R12
    Date: 2005–10–15
  20. By: Francesco CHELLI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Date: 2005–01
  21. By: Walls, Margaret (Resources For the Future); McConnell, Virginia (Resources For the Future); Kopits, Elizabeth
    Abstract: Many communities on the urban fringe are implementing a range of policies to preserve farmland and open space, cluster residential development, and guide development to areas with existing infrastructure. These efforts are an attempt to control overall growth and the concomitant loss in open space and also to counter a trend toward the so-called large lot development that often takes place in these areas. Planners have argued that policies to manage density are the most important local policy focus for urban areas in the coming years. It is possible that large lot development and sprawl are themselves the result of government policy. Most local governments use zoning to establish minimum acreage requirements for each residential dwelling unit; in ex-urban localities, these limits are often quite high. Developers might build a subdivision with average lot sizes greater than the minimum but they cannot by law go below it. Some researchers have argued, however, that the spatial patterns of development are simply the natural result of household preferences and market forces. In this paper, we address the question of whether zoning limits are the primary cause of lowdensity, sprawling development or whether market forces tend to dictate this outcome. If zoning limits account for low-density development in at least some cases, how would development patterns be different if there had been no such rules? We begin by constructing a simple model of the developer decision about the density of new development. The subdivision is the unit of observation, and developers must weigh both demand and cost considerations in choosing density, in addition to complying with zoning restrictions that vary across parcels. We apply the model using parcel-level data from a region where zoning rules vary but are exogenous to the period under study. Calvert County, Maryland, near Washington, DC, is an historically rural county that has experienced rapid growth in recent years. The county has a transferable development rights (TDRs) program that has led to a great deal of variability in the intensity of development across properties. We are able to not only examine the extent to which zoning has contributed to large lot development but also to determine the economic forces that underlie density decisions. Finally, we are able to forecast how density would have been different in the absence of zoning rules by estimating a Tobit equation that is censored for the observations constrained by zoning.
    Keywords: housing density, zoning, transferable development rights
    JEL: R14 R15 R52
  22. By: Katherine Kiel (Department of Economics, College of the Holy Cross)
    Abstract: A house is a bundle of many goods: The number of bedrooms, bathrooms, the quality of local public services, the tidiness of a neighbor’s yard, and the quality of the local environment. If transactions in the housing market reflect the interaction of informed buyers and sellers, then the price that the house sells for is the sum of the prices the buyer is willing to pay for each individual characteristic of the house. It is this notion that motivates environmental economists to study property values. If individuals consider the local environment as a component of the house they purchase, then information on the house and its sales price allows researchers to ‘tease out’ the price that individuals would be willing to pay for environmental goods. This approach relies on the use of the hedonic price model.
    Keywords: hedonic models, environmental prices, housing
    JEL: Q51 Q53 R2
    Date: 2006–01
  23. By: Krupnick, Alan (Resources For the Future); Blackman, Allen (Resources For the Future)
    Abstract: Location efficient mortgages (LEM) programs are an increasingly popular approach to combating urban sprawl. LEMs allow families who want to live in densely-populated, transit-rich communities to obtain larger mortgages with smaller downpayments than traditional underwriting guidelines allow. LEMs are premised on the proposition that homeowners in such "location efficient" areas can safely be allowed to breach underwriting guidelines designed to prevent mortgage default because they have lower than average automobile-related transportation expenses and more income available for mortgage payments. This paper employs records of over 8,000 FHA-insured mortgages matched with data on various measures of location efficiency to test this proposition. Our results suggest that it does not hold and that LEMs—like other low-downpayment mortgage programs—will raise mortgage default rates. This cost must be weighed against any potential anti-sprawl benefits LEMs may have.
    Keywords: urban sprawl, location efficiency, mortgage, default
  24. By: Jérome VICENTE (LEREPS-GRES); Yan Dalla PRIA (CSO – CNRS); Raphaël SUIRE (CREM – CNRS)
    Abstract: This articles examines the peculiar role of mimetic behaviors in co-location processes. We start showing that geographical proximity between agents and/or firms is not a sufficient nor necessary condition for the collective performance of clusters. Other types of socio-economic proximities characterize clusters, and our purpose is to show that, among the several ways to analyze the complex links between proximities and clusters, the theoretical outlook on the role played by mimetic interactions in co-location processes are certainly one of the most promising. Mimetic behaviors of location (in economics and sociology) are introduced in order to demonstrate that co-location processes can be the result of sequentiality, uncertainty, legitimacy and non market interactions, rather than full rational and isolated decisions and pure strategic market interactions. According to the type of mimetic behavior at work in the clustering process, the nature of socio-economic proximity can differ and have a strong influence of the “evolutionary stability” of clusters. All these theoretical considerations are illustrated through the emblematic French case of “Silicon Sentier”, cluster which has gathered together three hundred firms of the French net-economy (the famous “dotcom”) during the Internet bubble swelling.
    Keywords: cluster, mimetic interactions, proximity, stability, Silicon Sentier
    JEL: D83 R12 R30
    Date: 2006
  25. By: Almenberg, Johan (Stockholm School of Economics)
    Abstract: The Swedish system for inter-regional redistribution is examined from a political economy perspective and a growth perspective. A number of recent Swedish studies of this system are examined. Political economy concerns are found to be adequately represented in academic studies of this system, while lacking, at least explicitly, in all the major relevant government reports. Growth implications of extensive inter-regional redistribution are found to be relatively neglected in both academic studies and government reports. In particular, the short-circuiting of labour mobility (and hence the impairment of long-term structural adjustment) is examined at both micro- and macroeconomic levels. It is concluded that extensive inter-regional redistribution is likely to have considerable effects on labour mobility. The author argues that this almost entirely overlooked effect is an important consideration in evaluating the costs and benefits of inter-regional redistribution, and calls for further enquiry into the matter.
    Keywords: Inter-regional redistribution; fiscal federalism; political economy; growth; labour force mobility
    JEL: D72 D78 E60 H11 H31 H71 H77 O18 R23 R58
    Date: 2006–01–11
  26. By: Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
    Abstract: We conduct a national-scale study of the determinants of agricultural land values to better understand how current farmland prices are influenced by the potential for future land development. The theoretical basis for the empirical analysis is a spatial city model with stochastic returns to future land development. From the theoretical model, we derive an expression for the current price of agricultural land in terms of annual returns to agricultural production, the price of recently developed land parcels, and expressions involving model parameters that are represented in the empirical model by nonlinear functions of observed variables and parameters to be estimated. We estimate the model of agricultural land values with a cross-section on approximately three thousand counties in the contiguous U.S. The results provide strong support for the model, and provide the first evidence that option values associated with irreversible and uncertain land development are capitalized into current farmland values. The empirical model is specified in a way that allows us to identify the contributions to land values of rents from near-term agricultural use and rents from potential development in the future. For each county in the contiguous U.S., we estimate the share of the current land value attributable to future development rents. These results give a clearer indication of the magnitude of land development pressures and yield insights into policies to preserve farmland and associated environmental benefits.
  27. By: Julio Romero
    Abstract: En este artículo se estudian las diferencias sociales en el ingreso laboral desde una perspectiva regional. El análisis responde a tres preguntas ¿Existen diferencias en el ingreso laboral de las principales ciudades colombianas?, ¿Qué porcentaje de la desigualdad social en el ingreso laboral se puede atribuir a las diferencias regionales? y ¿Cuál es el costo social de tener un mercado laboral segmentado? A la primera pregunta el artículo responde que si existen, aunque menores a las observadas cuando se controla por educación, características laborales y costo de vida. En cuanto a la segunda pregunta, una descomposición de la desigualdad en el ingreso laboral sugiere que el efecto regional es nulo. Con respecto a la última pregunta se muestra, que el costo social se traduce en bajas tasas de retorno al capital humano y menor tasa de ocupación.
    Date: 2006–01–01
  28. By: Safirova, Elena (Resources For the Future); Gillingham, Kenneth
    Abstract: In determining the marginal cost of congestion, economists have traditionally relied upon directly measuring traffic congestion on network links, disregarding any “network effects,” since the latter are difficult to estimate. While for simple networks the comparison can be done within a theoretical framework, it is important to know whether such network effects in real large-scale networks are quantitatively significant. In this paper we use a strategic transportation planning model (START) to compare marginal congestion costs computed link-by-link with measures taking into account network effects. We find that while in aggregate network effects are not significant, congestion measured on a single link is a poor predictor of total congestion costs imposed by travel on that link. Also, we analyze the congestion proliferation effect on the network to see how congestion is distributed within an urban area.
    Keywords: marginal congestion costs, congestion pricing, urban networks
    JEL: R41 R48
  29. By: Smith, V. Kerry; Banzhaf, H. Spencer (Resources For the Future); Walsh, Randy
    Abstract: Environmental policy analyses increasingly require the evaluation of benefits from large changes in spatially differentiated public goods. Such changes are likely to induce general equilibrium effects through changes in household expenditures and local migration, yet current practice "transfers" constant marginal values for even the largest changes. Moreover, it ignores important distributional effects of policy. This paper demonstrates that recently developed locational equilibrium models can provide transferable general equilibrium benefit measures. Our results suggest that taking account of the potential for adjustment and household heterogeneity is important. Applying benefits estimated from this method to the effect of the Clean Air Act amendments in Los Angeles, we find that the estimated annual general equilibrium benefits in 2000 and 2010 are dramatically different by income group and location. The gains range from $33 to about $2,400 per household. These differences arise from variations in the air quality conditions, income, and the effects of general equilibrium price adjustment.
    Keywords: air quality, clean air act, non-market valuation, Tiebout model
    JEL: H41 Q25 R13
  30. By: Stephen Gibbons; Anne Green; Paul Gregg; Stephen Machin
    Abstract: This paper explores the changing extent of concentration worklessness and deprivation in Britains communities over the last twenty years and seeks to identify what shapes patterns of relative affluence and deprivation. The paper goes on to explore the evidence that there are lasting consequences from concentrated deprivation for the residents, including children. The paper address issues of employment, educational outcomes and crime victimisation. Looking at the available evidence from the UK and abroad, the evidence suggests that concentrated deprivation has little effect on employment opportunities, (e.g. moving people to more affluent neighbourhoods would make little difference), has modest effects on childrens educational outcomes and propensity to get involved in deviant behaviours but substantial effects on crime victimisation. The paper then concludes on what policy agendas could be developed to address concentrated deprivation and above all its consequences on residents outcomes.
    Keywords: neighbourhoods, employment, education, crime
    JEL: R23 J61 I21
    Date: 2005–07
  31. By: Andrea PRESBITERO
    Abstract: This work investigates the roots of economic development. The debate about the predominance of institutions over geography has not yet reached a firm conclusion: this analysis wants to highlight the main difficulties that one should address in order to find which are the real determinants of long-run economic growth. I argue that the institutional view is not so strong as it may appear: different specifications and different institutional indicators undermine the exclusive importance of institutions. The results of Acemoglu, Johnson and Robinson in favour of the institutional approach are no more valid if other institutional indicators are used instead of the risk of expropriation.;Geographical factors related to the health environment and the physical integration in the world markets play a role in the process of economic growth, beyond their effect on institutional development. Geography seems to be a factor even using different specification of the model. However, in this case, the Instrumental Variable procedure is far from being perfect: lack of sensible indicators and strong problem of endogeneity are the main difficulties. A closest look at the economic history and ecology should always be part of this sort of analysis.
    Keywords: economic development, institution gepgraphy, instrumental variables
    JEL: C31 O11 O18 P16
    Date: 2004–09
  32. By: Jaime Bonet
    Abstract: Uno de los patrones de cambio observados en la economía colombiana en la segunda mitad del siglo XX es el crecimiento en la participación de las actividades terciarias en el PIB. Este fenómeno se ha llamado terciarización y ha sido común tanto en países desarrollados como en aquellos en vía de desarrollo. En estos últimos, se pueden identificar una terciarización genuina, en la cual la los servicios mejoran la competitividad sistémica de la economía, y una terciarización espuria, en donde los servicios tiene poco impacto en la competitividad del resto de la economía. Este trabajo aporta evidencia que ayuda a profundizar la caracterización de este proceso en las regiones colombianas. En una primera etapa, utilizando técnicas de insumo producto, se identifican las actividades terciarias con efectos multiplicadores significativos: comercio, transporte y servicios a las empresas. En la segunda etapa, se estudia el tipo de terciarización que se presentan en las distintas regiones, encontrando que la participación de los servicios en el PIB regional aumenta en la medida en que el ingreso per cápita regional lo hace y que las regiones rezagadas tienden a presentar un patrón espurio de terciarización, mientras las más prósperas estarían asociadas a uno genuino.
    Date: 2006–01–31
  33. By: William J. Collins (Department of Economics, Vanderbilt University); Fred H. Smith (Department of Economics, Davidson College)
    Abstract: We undertake a case study of riots in the context of Cleveland's economic decline between 1950 and 1980. Our empirical perspective emphasizes differential changes in property values and population levels across census tracts depending on their proximity to the riots' epicenter. We find patterns that are consistent with concentrated, negative, and long-lasting effects from the 1960s riots. These estimates do not depend on whether we use a narrow or a broad categorization for "riot tracts", whether we use simple difference-in-difference measures or detailed information on the distance of each tract from the riot center, or whether we use ordinary least squares or matching estimation techniques. Moreover, the negative relationship between riots and property value trends is not merely a reflection of the pre-existing trend in value, the pre-riot racial composition of the neighborhoods, the pre-riot proportion of neighborhood residents holding manufacturing jobs, the neighborhood crime rate, nor changes in the observable characteristics of the housing stock. Cleveland¹s economic difficulties did not start with the riots. Rather, we suggest that the impact of the riots was compounded by long-run forces that were already eroding Cleveland¹s economic base.
    Keywords: Civil disturbance, race, housing
    JEL: R21 J15 N92
    Date: 2005–11
  34. By: Steven C. BOURASSA (School of Urban and Public Affairs, University of Louisville); Donald R. HAURIN (Department of Economics Ohio State University); Jessica L. HAURIN (Center for Real Estate Massachusetts Institute of Technology); Martin HOESLI (HEC, University of Geneva, FAME and University of Aberdeen); Jian SUN (School of Urban and Public Affairs, University of Louisville)
    Abstract: While the average change in house prices is related to changes in fundamentals or perhaps market-wide bubbles, not all houses in a market appreciate at the same rate.The primary focus of our study is to investigate the reasons for these variations in price changes among houses within a market. We draw on two theories for guidance, one related to the optimal search strategy for sellers of atypical dwellings and the other focusing on the bargaining process between a seller and potential buyers. We hypothesize that houses will appreciate at different rates depending on the characteristics of the property and the change in the strength of the housing market. These hypotheses are supported using data from three New Zealand housing markets.
    Keywords: Atypicality; Bargaining; Housing Risk; House Price Appreciation; Search Models
    JEL: R31 R21 D83
    Date: 2005–11
  35. By: Chiara Bentivogli (Banca d'Italia); Fabio Quintiliani (Banca d'Italia)
    Abstract: This paper compares the evolution of trade specialisation, by technological content, of Emilia-Romagna, Lombardia, Marche, Veneto and the Italian average over 1992-2002. It is shown that, over the period, the four regions’ export performance has been negatively affected by the stationarity of sectorial comparative advantages vis-à-vis the evolution of the structure of world demand. Only Veneto shifted its specialisation from low-tech to high-tech, while the other regions became increasingly despecialised in high-tech productions. At the end of the decade the four regions’ trade specialisation patterns is still dominated by the low-tech “made in Italy” goods. The four regions have a comparative disadvantage in the sectors with stronger world export growth, though they show some advantages in industries whose world demand rose at intermediate speed. Over the decade the specialisation in the world fastest growing sectors grew for Veneto, was unchanged for Marche, and decreased for Emilia-Romagna; Lombardia and Italy mitigated their comparative disadvantages in those sectors. The four regions’ exports are generally more concentrated than the world’s in the low-tech sectors; the negative gap between the regional and the world shares of high-tech exports has widened over the decade.
    Keywords: commercio internazionale, tecnologia, regioni
    JEL: F10 F14 R10
    Date: 2004–10
  36. By: Fabiana Santos (Cedeplar-UFMG); Marco Crocco (Cedeplar-UFMG); Frederico G. Jayme Jr (Cedeplar-UFMG)
    Abstract: The aim of this paper is to discuss the idea that knowledge externalities, as discussed in the Endogenous Growth Theory, can be spread over any kind of space. Although this point has already been discussed by some scholars in the heterodox tradition (Nelson, 1998, Martin and Sunley, 1998, among others), we would like to bring into discussion a new perspective that analyses the validity of this assumption in peripheral regions/countries. It will be argued that there are some peripheral structural conditions that constrain the generation, transfer and absorption of knowledge externalities. Above of all, it will be argued that the construction of “space” in the periphery is determinant for the absence of widespread diffusion of this kind of externality. This conclusion implies that the generality of the New Growth Theory is very difficult to be assumed.
    JEL: O40 R11
    Date: 2005–12
  37. By: Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
    Abstract: Changes in the use of land in the United States produce significant economic and environmental effects with important implications for a wide variety of policy issues, including protection of wildlife habitat, management of urban growth, and mitigation of global climate change. In contrast to previous descriptive and qualitative analyses of the trends in national land use, this paper uses an econometric approach to isolate the importance of historical changes in land-use profits and key government policies in determining national land-use changes from 1982 to 1997. The policies we examine are the Conservation Reserve Program (CRP) and total government payments to crop producers. We estimate a national-level discrete choice model of changes among the major land-use categories (crops, pasture, forest, urban, range, and CRP) with parcel-level observations of land use and land quality from the U.S.D.A. National Resources Inventory NRI) and measures of countylevel land-use net returns from a variety of sources. We then use fitted values from the econometric model to simulate land-use change from 1982 to 1997 under a series of factual and counterfactual scenarios that isolate the effects of different economic and policy factors. The simulations suggest how changes in economic returns and government policies have driven land-use changes in the past and will continue to affect nationwide land-use changes in the future. For example, we find that the introduction of the CRP and the decline in crop profits were the most significant explanatory factors driving the decline in cropland. Our results highlight some “unintended consequences” of government policies and the importance of net returns to a range of alternative land uses as determinants of land area change for each particular use.
    Keywords: land use; econometric model; counterfactual simulation; Conservation Reserve Program (CRP)
    JEL: C53 Q1 Q24 R14 R15
  38. By: Parry, Ian (Resources For the Future); Bento, Antonio
    Abstract: This paper uses analytical and numerical models to illustrate how the presence of other distortions within the transport system changes the overall welfare effect of a congestion tax. These other distortions include a transit fare subsidy, congestion on competing (unpriced) routes, accident externalities, gasoline taxes, and pollution externalities. Each of these pre-existing distortions can substantially alter the welfare effect of a congestion tax that would be predicted by a first-best analysis. If congestion taxes encourage travel on other congested routes, they can produce sizeable indirect welfare losses. In addition, induced reductions in the demand for gasoline can lead to substantial welfare losses when, as appears to be the case for European countries, gasoline taxes significantly exceed marginal pollution damages. On the other hand, congestion taxes may produce significant welfare gains by offsetting accident externalities, though these gains are partially offset by increased accidents on competing roadways. To the extent that congestion taxes increase the demand for transit, they can induce significant welfare gains or losses, depending on whether transit fares are above or below marginal supply costs. The importance of other distortions varies considerably across different transport systems and across different countries. Our generic analysis illustrates the proportionate change in the welfare effect of a congestion tax due to each of these distortions over a wide range of parameter scenarios.
  39. By: Charles van Marrewijk (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: We derive and discuss a general, but simple geographical economics model with congestion, allowing us to explain the economic viability of small and large locations. The model generalizes some previous work and lends itself to analyzing the impact of public policy in terms of infrastructure changes. We show analytically that scale effects (total size of the economy) and changes in the cost structure (fixed and marginal costs) are important from a welfare perspective, but largely irrelevant from an economic dynamics perspective.
    Keywords: Geographical economics; congestion; externalities
    JEL: F O R
    Date: 2005–10–31

This nep-geo issue is ©2006 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.