nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒07‒09
sixteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Tourism and economic growth at regional level: the cases of Spain and Italy By Isabel Cortés-Jiménez
  2. Urban decentralization and income inequality: Is sprawl associated with rising income segregation across neighborhoods? By Christopher H. Wheeler
  3. Regional Matching Frictions and Aggregate Unemployment By Aki Kangasharju; Sanna-Mari Hynninen; Jaakko Pehkonen
  4. Neighborhood income inequality By Christopher H. Wheeler; Elizabeth A. La Jeunesse
  5. Attracting Foreign Direct Investments in Europe: are Italian Regions Doomed? By Roberto Basile; Luigi Benfratello; Davide Castellani
  6. Do Rising Tides Lift All Prices? Income Inequality and Housing Affordability By Janna L. Matlack; Jacob L. Vigdor
  7. Merging the Purchasing Power Parity and the Phillips Curve Literatures: Regional Evidence from Italy By Andrea Vaona
  8. The price of residential land in large U.S. cities By Morris A. Davis; Michael G. Palumbo
  9. The lack of affordable housing in New England: how big a problem?: why is it growing?: what are we doing about it? By Alicia Sasser; Bo Zhao; Darcy Rollins; Robert Tannenwald
  10. Amenities, local conditions and fiscal determinants of factor growth in rural America By Eric Thompson; George Hammond; Stephan Weiler
  11. Knowlage accessibility and New Firm Formation By Karlsson, Charlie; Nyström, Kristina
  12. Total Factor Productivity Estimates: Some Evidence from European Regions By Maria Gabriela Ladu
  13. A productivity model of city crowdedness By Jordan Rappaport
  14. Improving small area estimation by combining surveys: new perspectives in regional statistics By Albert Satorra; Eva Ventura; Alex Costa
  15. State growth empirics: the long-run determinants of state income growth By Paul W. Bauer; Mark E. Schweitzer; Scott Shane
  16. How Do Trade in Intermediates and Geographical Forces Interact in Determining the Localisation of Industries in Central Eastern European Countries? By Gianfranco De Simone

  1. By: Isabel Cortés-Jiménez
    Abstract: During the last years several papers provide empirical evidence of the importance of tourism in the economic growth, although always at country level. The main aim of this paper is to analyse the possible relevance of tourism for the regional economic growth in a convergence context. Not only international tourism is analysed but also domestic tourism. This article focuses on two of the most important countries worldwide in tourism terms: Spain and Italy. Some geographical location criteria are also taken into account. Regarding the methodology, Arellano and Bond (1991) estimator for dynamic panel data models and Bruno (2005) finite sample correction are applied. Results reveal that both domestic and international tourism have a significant and positive influence in the regional economic growth although each one appears as crucial in different cases.
    Keywords: economic growth, international tourism, domestic tourism, regions, Spain, Italy
    JEL: C5 R11 O40
    Date: 2006
  2. By: Christopher H. Wheeler
    Abstract: Existing research has found an inverse relationship between urban density and the degree of income inequality within metropolitan areas, suggesting that, as cities spread out, they become increasingly segregated by income. This paper examines this hypothesis using data covering more than 160000 block groups within 359 US metropolitan areas over the years 1980, 1990, and 2000. The findings indicate that income inequality - defined by the variance of the log household income distribution - does indeed rise significantly as urban density declines. This increase, however, is associated with rising inequality within block groups as cities spread out. The extent of income variation exhibited between different block groups, by contrast, shows virtually no association with population density. There is, accordingly, little evidence that sprawl is systematically associated with greater residential segregation of households by income.
    Keywords: Income distribution ; Income
    Date: 2006
  3. By: Aki Kangasharju; Sanna-Mari Hynninen; Jaakko Pehkonen
    Abstract: This study demonstrates that a stochastic frontier approach applied to regional level data offers a convenient and interesting method to examine how regional differences in matching efficiency and structural factors contribute to aggregate unemployment. The study reveals notable and temporally stable differences in matching efficiency across travel-to-work areas in Finland. If all areas were as efficient as the most efficient one, the number of hirings would increase by about 40 per cent. This would reduce the aggregate unemployment rate from the current 8.5 per cent level to 6.0 per cent. If all the areas shared the same structural characteristics as the most favourable area, the aggregate unemployment rate would drop to 7.1 per cent.
    Keywords: Efficiency, matching, aggregate unemployment, regional labour markets
    Date: 2006–03–03
  4. By: Christopher H. Wheeler; Elizabeth A. La Jeunesse
    Abstract: This paper offers a descriptive empirical analysis of the geographic pattern of income inequality within a sample of 359 US metropolitan areas between 1980 and 2000. Specifically, we decompose the variance of metropolitan area-level household income into two parts: one associated with the degree of variation among household incomes within neighborhoods - defined by block groups and tracts - and the other associated with the extent of variation among households in different neighborhoods. Consistent with previous work, the results reveal that the vast majority of a city*s overall income inequality - at least three quarters - is driven by within-neighborhood variation rather than between-neighborhood variation, although we find that the latter rose significantly during the 1980s, especially between block groups. We then identify a number of metropolitan area-level characteristics that are associated with both levels of and changes in the degree of each type of residential income inequality.
    Keywords: Income distribution ; Income
    Date: 2006
  5. By: Roberto Basile (Isae (Rome) and University of Macerata); Luigi Benfratello (University of Turin and Ceris-CNR(Turin)); Davide Castellani (University of Urbino and Centro Studi Luca d'Agliano)
    Abstract: During the nineties, Europe became a major recipient of FDIs but Italian regions have been largely excluded from this process. Was it due to their characteristics, or were Italian regions ‘doomed’ by a negative country effect? In this paper we address this issue by estimating the determinants of multinational firms’ location choices in 52 EU regions. We find that Italian regions indeed attracted significantly less than their observable potential, and that this could be explained by the inefficiency of the bureaucratic apparatus and of the legal system. The effect of taxes is instead strongly sensitive to the inclusion of agglomeration variables and is asymmetric across regions.
    Keywords: multinational firms, location choices, Italy, institutions and policies, negative binomial regression
    JEL: F23 C35 O52
    Date: 2005
  6. By: Janna L. Matlack; Jacob L. Vigdor
    Abstract: Simple partial-equilibrium models suggest that income increases at the high end of the distribution can raise price paid by those at the low end of the income distribution. This prediction does not universally hold in a general equilibrium model, or in models where the rich and poor consume distinct products. We use Census microdata to evaluate these predictions empirically, using data on housing markets in American metropolitan areas between 1970 and 2000. Evidence clearly and unsurprisingly shows that decreases in one's own income lead to less housing consumption and less income left over after paying for housing. The effect of increases in others' income, holding one's own income constant, is more nuanced. In tight housing markets, the poor do worse when the rich get richer. In slack markets, at least some evidence suggests that increases in others' income, holding own income constant, may be beneficial.
    JEL: D12 D31 I31 R21
    Date: 2006–06
  7. By: Andrea Vaona (Dipartimento di Scienze economiche (Università di Verona))
    Abstract: The main purpose of this paper is to merge together two strands of the literature regarding, either directly or indirectly, infation: the PPP and the Phillips curve ones. In order to accomplish this task, this contribution applies the tools of the Empirical Growth Literature and of Dynamic Panel Data estimation on a sample of 81 Italian provinces from the year 1986 to the year 1998, exploiting cross-sectional variation to avoid to use instruments not directly connected with the inflation generating process. This research strategy allows to conclude that inflation is characterized by a low degree of persistence and by conditional B-convergence across provinces. Its most suitable driving vari- able is the unemployment rate and there are long-term non neutralities at the regional level.
    Keywords: Phillips Curve, Regions, Inflation
    JEL: E31 E32 R10
    Date: 2006–06
  8. By: Morris A. Davis; Michael G. Palumbo
    Abstract: Combining data from several sources, we build a database of home values, the cost of housing structures, and residential land values for 46 large U.S. metropolitan areas from 1984 to 2004. Our analysis of these new data reveal that since the mid-1980s residential land values have appreciated over a much wider range of cities than is commonly believed. And, since 1998, almost all large U.S. cities have seen significant increases in real residential land prices. Averaging across the cities in our sample, by year-end 2004, the value of residential land accounted for about 50 percent of the total market value of housing, up from 32 percent in 1984. An implication of our results is that the future course of home prices--their average rate of appreciation and their volatility--is likely to be determined even more by the course of land prices than used to be the case.
    Date: 2006
  9. By: Alicia Sasser; Bo Zhao; Darcy Rollins; Robert Tannenwald
    Abstract: Although housing costs in greater Boston and elsewhere around the region have leveled off, affordable housing is still high on the public policy agenda in every New England state. A growing chorus of employers and policymakers are warning that the region's high cost of housing is now undermining its ability to attract and retain workers and businesses. This paper presents a thorough, region-wide analysis of the housing affordability problem in New England. We construct three affordability indicators to examine differences in the cost of housing across socioeconomic, demographic, and occupational groups, for every New England state and for the region's principal metropolitan areas.
    Keywords: Housing - New England ; Housing - Prices ; Housing policy - New England
    Date: 2006
  10. By: Eric Thompson; George Hammond; Stephan Weiler
    Abstract: This paper examines how amenities, asset indicators, and fiscal factors influence the growth in factors of production from 1972 to 1999 in the 466 non-metropolitan labor market areas in the continental United States. In developing our model of non-metropolitan factor markets, we combine the emphasis of Brown et al. (2003) on the affect of taxes and public expenditure policy on labor and capital formation with the emphasis of Beeson et al. (2001) on the importance of climate and natural features on localized population growth. We develop our own measure of capital stock in non-metropolitan areas using data from the Census of Manufacturing for 1967, 1972, 1977, 1982, 1987, and 1992. Results indicate that local taxes discourage both employment growth and manufacturing capital formation, but that local public infrastructure investment and the level of local entrepreneurship encourages employment growth. Amenities such as a favorable climate and the presence of surface water encourage the growth of employment, and greater local wealth, as measured by dividend, interest, and rent income, encourages the formation of manufacturing capital stock. Results fail to support an “export base” approach for rural economies where greater manufacturing capital stock encourages greater employment in a region.
    Keywords: Rural areas ; Rural development
    Date: 2006
  11. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the role of knowledge for successful entrepreneurship. The paper explicitly discusses the role of accessibility to university and company R&D for new firm formation. Company R&D is assumed to contain a higher share of R&D directed towards generating technological knowledge. Hence, the accessibility to such R&D are expected to have a stronger influence on new firm formation than the accessibility to university R&D. Since knowledge can also be assumed to be spatially bounded and diffuses in geographical space, it is argued that local interaction, measured by intra-municipality accessibility to knowledge, have a stronger influence on new firm formation than interregional interaction. In the empirical analysis data on new firm formation in 288 Swedish municipalities and accessibility to university and company R&D for 1997 and 1999 are used. We find that accessibility to company R&D have a stronger impact on new firm formation than accessibility to university R&D. We also find that close knowledge interactions are more important for new firm formation than long distance knowledge interactions. Accessibility to inter-regional company R&D has even a negative impact on new firm formation.
    Keywords: knowledge; accessibility; regional; entrepreneurship; Sweden
    JEL: L10 R11
    Date: 2006–07–07
  12. By: Maria Gabriela Ladu
    Abstract: This paper provides total factor productivity estimates for a sam- ple of 115 European Regions over the period 1976-2000. In particular, a set of Cobb-Douglas production functions is estimated using panel techniques and allowing for heterogeneity across regions. Moreover, on the basis of speci…c panel tests, the paper shows that there is em- pirical evidence which suggests the presence of unit roots in the series and panel cointegration tests are applied to guard against spurious regression.
    Keywords: Total Factor Productivity, Panel Unit Root Test, Panel Cointegration
    JEL: C23 D24 O47 O52
    Date: 2006
  13. By: Jordan Rappaport
    Abstract: Population density varies widely across U.S. cities. A simple, static general equilibrium model suggests that moderate-sized differences in cities’ total factor productivity can account for such variation. Nevertheless, the productivity required to sustain above-average population densities considerably exceeds estimates of the increase in productivity caused by such high density. In contrast, increasing returns to scale may be able to sustain multiple equilibria at below-average population densities.
    Keywords: Cities and towns ; Productivity ; Population
    Date: 2006
  14. By: Albert Satorra; Eva Ventura; Alex Costa
    Abstract: A national survey designed for estimating a specific population quantity is sometimes used for estimation of this quantity also for a small area, such as a province. Budget constraints do not allow a greater sample size for the small area, and so other means of improving estimation have to be devised. We investigate such methods and assess them by a Monte Carlo study. We explore how a complementary survey can be exploited in small area estimation. We use the context of the Spanish Labour Force Survey (EPA) and the Barometer in Spain for our study.
    Keywords: Composite estimator, complementary survey, mean squared error, official statistics, regional statistics, small area
    Date: 2006–06
  15. By: Paul W. Bauer; Mark E. Schweitzer; Scott Shane
    Abstract: Real average U.S. per capita personal income growth over the last 65 years exceeded a remarkable 400 percent. Also notable over this period is that the stark income differences across states have narrowed considerably: In 1939 the highest income state’s per capita personal income was 4.5 times the lowest, but by 1976 this ratio had fallen to less than 2 times. Since 1976, the standard deviation of per capita incomes at the state level has actually risen, as some higher-income states have seen their income levels rise relative to the median of the states. A better understanding of the sources of these relative growth performances should help to characterize more effective economic development strategies, if income growth differences are predictable. In this paper, we look for statistically and economically significant growth factors by estimating an augmented growth model using a panel of the 48 contiguous states from 1939 to 2004. Specifically, we control for factors that previous researchers have argued were important: tax burdens, public infrastructure, size of private financial markets, rates of business failure, industry structure, climate, and knowledge stocks. Our results, which are robust to a wide variety of perturbations to the model, are easily summarized: A state’s knowledge stocks (as measured by its stock of patents and its high school and college attainment rates) are the main factors explaining a state’s relative per capita personal income.
    Keywords: Economic development ; Income ; Education - Economic aspects
    Date: 2006
  16. By: Gianfranco De Simone (University of Milan and Centro Studi Luca D'Agliano)
    Abstract: Growing inflows of FDI and the increasing integration Central Eastern European Countries’ firms in International Production Networks set by EU-15 principals have brought to a rise in trade in parts and components. As a consequence, new patterns of localisation of industrial activities in CEECs have been observed. I put forward a general equilibrium model of trade and production which tries to explain cross-country variations of sectoral output on the basis of home market effect, trade in middle products, comparative advantages and market potential. Results coming from the empirical estimation allow me to draw some considerations about the driving forces behind the localisation over the second half of the 1990s of the four sectors in which most of the CEECs’ trade in intermediates with EU-15 is concentrated. I also argue that the proposed framework can be employed to test for the effectiveness of alternative trade theories.
    Keywords: Trade in Parts and Components, International Production Networks, Market Potential, Industry Localisation, Home Market Effect
    JEL: F10 F12 F14 F15
    Date: 2005

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