nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒02‒26
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Compensation of regional unemployment in housing markets By Wouter Vermeulen; Jos van Ommeren
  2. Innovation Clusters in the European Regions By Rosina Moreno; Raffaele Paci; Stefano Usai
  3. The Delimitation and Coherence of Functional and Administrative Regions By Cörvers Frank; Hensen M.; Bongaerts D.
  4. Technological activity in the european regions By Barbara Dettori; Raffaele Paci; Stefano Usai
  5. Gli effetti del capitale pubblico sulla produttivitá delle regioni italiane By Emanuela Marrocu; Raffaele Paci; Francesco Pigliaru
  6. The welfare effects of slum improvement programs : the case of Mumbai By Bento, Antonio; Cropper, Maureen; Takeuchi, Akie
  7. Urban Sprawl and Spatial Segregation. A review (In French) By POUYANNE Guillaume (IERSO-IFReDE-GRES)
  8. How important is access to jobs? Old question - improved answer By Åslund, Olof; Östh, John; Zenou, Yves
  9. The dynamics of regional inequalities By Eric Strobl,; Salvador Barrios
  10. Structural change and regional employment dynamics By Uwe Blien; Helge Sanner
  11. Convergence and divergence in Neoclassical Growth models with human capital By Adriana Di Liberto
  12. Geographic Spillover of Unionism By Thomas J. Holmes
  13. Urban Social Exclusion in Transitional China By Bingqin Li
  14. Parallel lives? Ethnic segregation in schools and neighbourhoods By Simon Burgess; Ruth Lupton; Deborah Wilson
  15. Agglomeration and Growth in the NEG: a critical assessment By Fabio Cerina; Francesco Pigliaru

  1. By: Wouter Vermeulen; Jos van Ommeren
    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 hypothesise that workers in high-unemployment regions are compensated in housing markets. Modelling regional unemployment differentials as a consequence of centralised 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. Workers in regions with high unemployment and low per capita income are therefore not necessarily worse off, and regional support programs should take this into account.
    Keywords: regional unemployment; housing markets; wage curve; compensating differentials; hedonic models; regional policy
    JEL: R23 R13 J64
    Date: 2006–02
  2. By: Rosina Moreno; Raffaele Paci; Stefano Usai
    Abstract: This paper investigates on the presence of innovation clusters in the European regions. The analysis is based on a databank set up by CRENoS on regional patenting at the European Patent Office classified by ISIC sectors (2 digit), which considers 175 regions of 17 countries in Europe. Firstly, an analysis of the spatial distribution of innovation activities in Europe is performed. Some global and local indicators for spatial association are presented, indicating the presence of a general dependence process in the distribution of the phenomena under examination. The analysis is implemented for 23 manufacturing sectors to assess for the presence of significant differences in their spatial features. Moreover, the extent and strength of spatial externalities are evaluated for two periods: 1994-96 and 1999-01. Secondly, this paper contributes to the analysis of the process of spatial agglomeration of innovative activities by investigating directly its determinants. Our main purpose is to identify the extent to which the degree of specialisation or diversity in a region may affect the innovative activities in a particular local industry. Other local factors are also tested such as home market effect and other agglomeration phenomena. Moreover the geographical extent of such effects is measured by means of the usual tests of spatial econometrics.
    Keywords: Innovative activity, Spatial analysis, European regions, Knowledge production function
    Date: 2005
  3. By: Cörvers Frank; Hensen M.; Bongaerts D. (ROA rm)
    Abstract: The aim of this paper is to examine the coherence between and within functional as well as administrative regions in a labour market context. The larger the coherence of the local labour markets within the delimited regions, the larger the heterogeneity between the delimited regions is expected to be for particular measures related to the economy and the labour market. Contrary to previous delimitation studies we test for labour market coherence. The functionally defined regions are compared with the administratively defined regions with respect to four economic indicators: (i) income level; (ii) housing prices; (iii) employment rate, and (iv) unemployment rate. It turns out that the administrative delimitation of the Netherlands performs, on average, equally well as the functional delimitation. The hypothesis that the municipalities within the administratively defined regions show less coherence than the municipalities within the functionally delimited regions, cannot be rejected. We find some minor evidence that the coherence is greater for the average income level of municipalities within functional regions than within administrative regions. It can be concluded that there is not much to be gained in labour market policies by using functional instead of administrative divisions of regional labour markets. Therefore we doubt the usefulness of other studies on functional delimitations of labour market regions. Finally, our results imply that it may be better for regional labour market policies not to use a highly differentiated division of regions for such a small country as the Netherlands.
    Keywords: education, training and the labour market;
    Date: 2006
  4. By: Barbara Dettori; Raffaele Paci; Stefano Usai
    Abstract: This paper investigates technological activity in the European regions. The analysis is based on a statistical databank set up by CRENoS on regional patenting at the European Patent Office spanning from 1978 to 2001 and classified by ISIC sectors at the 2 digit level. We consider 175 regions of 17 countries in Europe, the 15 members of the European Union plus Switzerland and Norway. An analysis of the spatial distribution of innovation activities in Europe is performed. Some global and local indicators for spatial association are presented, signaling the presence of a general dependence process in the distribution of the phenomena under examination. The analysis is implemented for different manufacturing sectors to assess for the presence of significant differences in the their spatial features. Moreover, the extent and strength of spatial externalities are evaluated for some subperiods spanning from the early eighties to the late nineties.
    Date: 2005
  5. By: Emanuela Marrocu; Raffaele Paci; Francesco Pigliaru
    Abstract: This paper investigates the role played by public capital in increasing the productivity levels in Italy. For the construction of the regional series for the public capital over the period 1996-2002, the study benefits from the use of the rich dataset on public expenditure, recently published by the Dipartimento per le Politiche di Sviluppo of the Italian Ministry of Economy and Finance. On the basis of estimated panel production functions the results point out that public capital has a positive and significant effect on production. Moreover, the effects of all production factors vary considerably between the Centre-Northern regions and the Southern regions of the country. In particular, while private capital is more effective in the South, public capital and labour exhibits elasticities much higher in the Centre-North with respect to the Mezzogiorno. The disaggregation of public capital in economic categories signals a significant different impact in the two macroareas. When the analysis is carried out by distinguishing among government levels it turns out that the decentralized administrative bodies are much less efficient in the South in delivering public expenditure.
    Keywords: public capital, production function, regional disparities, Italy
    JEL: C23 D24 O47
    Date: 2006
  6. By: Bento, Antonio; Cropper, Maureen; Takeuchi, Akie
    Abstract: The authors compare the welfare effects of in situ slum upgrading programs with programs that provide slum dwellers with better housing in a new location. Evaluating the welfare effects of slum upgrading and resettlement programs requires estimating models of residential location choice, in which households trade off commuting costs against the cost and attributes of the housing they consume, including neighborhood attributes. The authors accomplish this using data for 5,000 households in Mumbai, a city in which 40 percent of the population live in slums. The precise welfare effects of resettlement programs depend on assumptions made about the ease with which w orkers can change jobs and also on the ethnic characteristics of neighborhoods in which new housing is located. To illustrate this point the authors consider a realistic slum upgrading program that could be offered to residents in their sample living in east Mumbai. They summarize the effects of job opportunities and neighborhood composition on welfare by mapping how compensating variation for the program changes depending on where in Mumbai improved housing is located. If program beneficiaries continue working in their original job, the set of welfare-enhancing locations for the upgrading program is small. The set increases greatly if it is assumed that workers can change jobs. The benefits of this program are contrasted with the benefits of in situ housing improvements.
    Keywords: Housing & Human Habitats,Urban Slums Upgrading,Urban Services to the Poor,Urban Housing,Municipal Housing and Land
    Date: 2006–02–01
    Abstract: This article explores the theoretical linkages between urban sprawl and social segregation. We first present the way segregation can increase urban sprawl : according to the « flight from blight hypothesis », mechanisms of segregation may form socially homogenous areas which tend to move away from each other. Second, we show that the influence of sprawl on segregation is ambivalent. On one’s hand, it diminishes the pressure on rent ; thus the exclusion process is softened. On the other hand, it gives more achievability to bring together people who want to. This last process is reinforced by exclusionary zoning practices. A review of some empirical studies on the link between residential density and social segregation show that the direction of such a relation is unspecified. We finally argue for an analysis of the urban sprawl-social segregation linkages as from the study of residential relocations.
    Keywords: urban sprawl, social segregation, exclusionary zoning, flight from blight
    JEL: R12 R14 R41
    Date: 2006
  8. By: Åslund, Olof (IFAU - Institute for Labour Market Policy Evaluation); Östh, John (Uppsala University); Zenou, Yves (IUI, The Research Institute of Industrial Economics)
    Abstract: We study the impact of job proximity on individual employment and earnings. The analysis exploits a Swedish refugee dispersal policy to get exogenous variation in individual locations. Using very detailed data on the exact location of all residences and workplaces in Sweden, we find that having been placed in a location with poor job access in 1990–91 adversely affected employment in 1999. Doubling the number of jobs in the initial location in 1990–91 is associated with 2.9 percentage points higher employment probability in 1999. The analysis suggests that residential sorting leads to underestimation of the impact of job access.
    Keywords: Spatial mismatch; endogenous location; natural experiment
    JEL: J15 J18 R23
    Date: 2006–02–14
  9. By: Eric Strobl,; Salvador Barrios
    Abstract: This paper analyses empirically the link between regional inequalities and economic development. Our starting hypothesis in this regard is that the evolution of regional inequalities should follow a bell-shaped curve depending on the level of national economic development since growth by its very nature is unlikely to appear everywhere at the same time, as has been argued by a number of authors, such as Kuznets (1955) to Lucas (2000). We test this hypothesis econometrically using semi-parametric estimation techniques and regional data for a panel of European countries. Our results provide strong support for such a bell-shaped curve and are robust to changing the regional administrative units and the time period, as well as controlling for other possible determinants of regional inequalities. We derive a number of policy implications from our results.
  10. By: Uwe Blien; Helge Sanner
    Abstract: A casual look at regional unemployment rates reveals that there are vast differences, which cannot be explained by different institutional settings. Our paper attempts to trace these differences in the labor market performance back to the regions' specialization in products that are more or less advanced in their product cycle. The model we develop shows how individual profit and utility maximization endogenously yields higher employment levels in the beginning. In later phases, however, employment decreases in the presence of process innovation. Our model suggests that the only way to escape from this vicious circle is to specialize in products that are at the beginning of their "economic life". The model is based on an interaction of demand and supply side forces.
    Keywords: Structural change; Productivity growth; Labor market dynamics; Specialization of Regions
    JEL: O41 D91 J23 R23
    Date: 2006–02
  11. By: Adriana Di Liberto
    Abstract: Among the determinants of the growth and convergence processes identified by the theoretical literature, human capital is certainly one of the most important. This paper offers a selective survey of the more recent contributions of the theory of human capital and growth. In particular, our aim is to provide the necessary link between the theory on growth, convergence and human capital and the empirics of convergence. Summarising with a play on words, we might conclude that during the last fifteen years there has been a convergence of ideas between endogenous and exogenous models with respect to the convergence hypothesis where human capital plays an important role. Despite the still theoretically important difference between models that assume exogenous versus models that assume endogenous long-run growth rates, both theories predict that a mechanism of convergence is possible, but it will only be so among similar economies. In particular, most theoretical literature assumes that similar levels of human capital are fundamental for catch up to take place. Therefore, both theories are currently able to explain a stylised fact of the empirical literature on growth, namely the observed convergence among groups of homogeneous countries and the absence of convergence when large and heterogeneous data sets are introduced. This observation explains why, with current econometric techniques, it is not possible to discriminate endogenous versus exogenous models by simply using a convergence regression.
    JEL: O40 O15 O33
    Date: 2005
  12. By: Thomas J. Holmes
    Abstract: Unionism in the United States is contagious; it spills out of coal mines and steel mills into other establishments in the neighborhood, like hospitals and supermarkets. The geographic spillover of unionism is documented here using a newly constructed establishment level data on unionism that is rich in geographic detail. A strong connection is found between unionism of health care establishments today and proximity to unionized coal mines and steel mills from the 1950s.
    JEL: J5 R0
    Date: 2006–02
  13. By: Bingqin Li
    Abstract: This paper demonstrates that urban social exclusion in China does not only include restricted participation by the ¿underclass¿ in urban life, but also the deprivation of certain political, social and economic rights. In addition, the paper describes how the character of urban social exclusion has changed over time. The author also examines the social exclusion of rural workers living and working in urban areas. The paper concludes by arguing that urban social exclusion in China needs coordinated reforms that target the whole set of problems in the urban ¿underclass¿ lacking political rights, social protection and economic opportunities.
    Keywords: social exclusion, urban China, rural to urban migrants
    JEL: J43 R23 I30
    Date: 2004–03
  14. By: Simon Burgess; Ruth Lupton; Deborah Wilson
    Abstract: We provide evidence on the extent of ethnic segregation experienced by children across secondary schools and neighbourhoods (wards). Using 2001 Schools Census and Population Census data we employ the indices of dissimilarity and isolation and compare patterns of segregation across nine ethnic groups, and across Local Education Authorities in England. Looking at both schools and neighbourhoods, we find high levels of segregation for the different groups, along with considerable variation across England. We find consistently higher segregation for South Asian pupils than for Black pupils. For most ethnic groups children are more segregated at school than in their neighbourhood. We analyse the relative degree of segregation and show that high population density is associated with high relative school segregation.
    Keywords: education, sorting
    JEL: J7 J16 J42
    Date: 2005–06
  15. By: Fabio Cerina; Francesco Pigliaru
    Abstract: This chapter is divided into two parts. In the first part we review the main results of a typical "New Economic Geography and Growth" (NEGG) model (Baldwin and Martin, 2003) and assess the contribution of this literature to the issue of long-run income gaps between countries. In the second part we discuss the robustness in some results of these models which are directly linked to important policy implications and we show that these results crucially depend on very restrictive values of some parameters of the model. In particular, depending on the different values of the degree of love for variety and the elasticity of substitution between traditional and manufacturing goods, our analytical examples reveal that: a) when trade is costly enough the symmetric equilibrium might not be stable also when capital is perfectly mobile; b) the rate of growth might depend on the geographical allocation of industries also when spillovers are global and, c) when industrial firms are concentrated in only one region, countries might not grow at the same rate in real terms.
    Date: 2005

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