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on Economic Geography |
| By: | Michael Pflüger (University of Passau, DIW Berlin and IZA Bonn); Jens Südekum (University of Konstanz and IZA Bonn) |
| Abstract: | Models of the new economic geography share a number of common conclusions, but also exhibit notable differences, in particular with respect to the shape of the location pattern and the efficiency of the market equilibrium. This reflects the fact that these models rely heavily on specific functional forms. In this paper we approach the properties of the 'footloose entrepreneur' class of new economic geography models with a unifying framework based on the indirect utility function of mobile agents. This approach has several payoffs. We are able to provide general, yet handy, formulae to determine the break point, the bifurcation pattern and the welfare properties of the market equilibrium. Moreover, an application of this framework allows us to show how specific results in the literature can be reconciled as special cases, thereby allowing us to highlight the origin of their differences. |
| Keywords: | new economic geography, agglomeration, location pattern, regional policy |
| JEL: | R12 R50 F12 F15 F22 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2256&r=geo |
| By: | Enflo, Kerstin (Department of Economic History); Hjertstrand, Per (Department of Economics, Lund University) |
| Abstract: | We address the issue of Western European regional productivity growth and convergence by means of Data Envelopment Analysis (DEA), decomposing labor productivity into efficiency change, technical change and capital accumulation. The decomposition shows that most regions have fallen behind the production frontier in efficiency and that capital accumulation has had a diverging effect on the labor productivity distribution. We also account for the inherent bias and the stochastic elements in the efficiency estimation using bootstrapping methods. We find that the relative ranking of the bias-corrected efficiency scores remains stable after the bias correction and that the DEA successfully identifies the regions on the production frontier as significantly more efficient than other regions. |
| Keywords: | Bootstrap; DEA; Efficiency; Regional Convergence |
| JEL: | C14 C15 O47 R11 |
| Date: | 2006–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2006_017&r=geo |
| By: | Lant Pritchett |
| Abstract: | Ghost towns dot the West of the United States. These cities boomed for a period and then, for various reasons, fell into a process of decline and have shrunk to a small fraction of their former population. Are there ghost countries—countries that, if there were population mobility, would only have a very small fraction of their current population? This paper carries out four empirical illustrations of the potential magnitude of the “ghost country” problem by showing that the “desired population” of any given geographic region varies substantially. First, the variance of growth rates of populations due to mobility across regions of the same country is often twice large as the variance across all developing countries in the world. While the variance of per capita output or income growth is much smaller. The ratio of the variance of the growth of population to the variance of the growth of output per head across regions within countries is 4 to 14 times as large as the same ratio across developing countries. Second, using county level data I construct “ghost regions” of the United States —contiguous collections of counties that are the size of many countries and have only a third the population they would have had without out-migration. Third, I compare the historical evolution of labor force and real wages of Ireland in the nineteenth century to the response of labor force and wages (or output per head) to negative shocks when labor mobility is restricted. Fourth, I calculate the changes in the labor force that would restore GDP per capita to its previous peak. All of these calculations suggest that even with thorough going “globalization” —the free mobility of goods and capital— and complete “policy reform” —common economic institutions and policies— there will remain substantial pressures for labor mobility. This also implies there will be both boom towns and ghost countries. |
| Keywords: | population mobility, migration, population growth, |
| JEL: | O15 F22 J23 J61 J68 N30 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:36&r=geo |
| By: | Giovanni Peri |
| Abstract: | The recent literature on externalities of schooling in the U.S. is rather mixed: positive external effects of average education are hardly found at all, while often positive externalities from the share of college graduates are identified. This paper proposes a simple model to explain this fact and tests it using U.S. states data. The key idea is that advanced technologies, associated with high total factor productivity and high returns to skills, are complementary to highly educated workers, as opposed to traditional technologies, complementary to less educated. Our calibrated model predicts that workers with twelve years of schooling (high school graduates) are indifferent between traditional and advanced technologies, while more educated workers adopt the advanced technologies and benefit from the larger private and social returns associated to them. Only shifts in education above high school graduation are therefore associated with positive social returns stemming from more efficient technologies. The empirical analysis, using compulsory attendance laws, immigration of highly educated workers and the location of land-grant colleges as instruments confirm that an increase in the share of college graduates, but not an increase in the share of high school graduates, had large positive production externalities in U.S. States. |
| JEL: | J24 J31 O41 R11 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12440&r=geo |
| By: | Michael Fritsch; Pamela Mueller |
| Abstract: | We investigate the effects of new business formation on employment change in German regions. A special focus is on the lag-structure of this effect and on differences between regions. The different phases of the effects of new business formation on regional development are relatively pronounced in agglomerations as well as in regions with a high-level of labor productivity. In low-productivity regions, the overall employment effect of new business formation activity might be negative. The interregional differences indicate that regional factors play an important role. |
| Keywords: | Entrepreneurship, new business formation, regional development |
| JEL: | M13 O1 O18 R11 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2006-19&r=geo |
| By: | Fiorenza Belussi (University of Padova); Alessia Sammarra (University of L'Aquila) |
| Abstract: | The aim of this paper is to contribute to the debate about how, in advanced countries, industrial districts specialised in traditional manufacturing industries evolve as a consequence of new challenges linked to the globalisation process. Using a multiple case study design, the study examines the evolution of two fashion-led Italian districts: the Montebelluna sportswear system and the Vibrata-Tordino-Vomano clothing district. Our findings reveal that cluster firms’ ability to shift from manufacturing to other activities providing higher returns along the global value chain is key to understanding the effect of globalisation and relocation processes on the cluster’s long-term competitiveness. As illustrated in this study, weak learning districts are the most threatened while innovative districts are able to enact a selective process of relocation, substituting outplaced activities with more valuable ones and attracting inward investments. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0023&r=geo |
| By: | Giorgio Ponti |
| Abstract: | The restoration of an historic school building in Battipaglia, Italy, will provide new public facilities and is hoped to boost urban renewal. The municipality of Battipaglia, in the province of Salerno, held an architectural competition for renovating the E. De Amicis Primary School and the surrounding area. The winning project, submitted by a group of Italian architects headed by Alfredo Amati, offers four main points of interest. |
| Keywords: | Italy, renovation |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaaa:2005/14-en&r=geo |
| By: | Leah Brooks |
| Abstract: | When the median voter's preference sets the level of local public goods, some voters are left unsatisfied. Is there an institution by which subsets of voters can resolve the collective action problem and increase the local provision of public goods? If so, what are the consequences? In response to problems such as crime and vandalism, neighborhood property owners have established Business Improvement Districts (BIDs) to provide local public goods. When a BID is approved by a majority of property owners in a neighborhood, state law makes contributions to the BID budget mandatory. This resolution of the neighborhood's collective action problem reduces crime - BIDs in the city of Los Angeles are robustly associated with crime declines of 5 to 9 percent. Indeed, crime falls regardless of estimation technique: fixed effects; comparing BIDs to neighborhoods that considered, but did not adopt, BIDs; using propensity score matching; and comparing BIDs to their neighbors. Strikingly, these declines are purchased cheaply. Attributing all BID expenditure to violent crime reduction, and thus ignoring the impact of BID expenditure on many quality-of-life crimes, BIDs spend $21,000 to avert one violent crime. This higher bound estimate is substantially lower than the $57,000 social cost of a violent crime. |
| JEL: | R5 H7 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:mcl:mclwop:2006-04&r=geo |
| By: | Leah Brooks |
| Abstract: | A wealth of anecdotal evidence suggests that, in the wake of tax revolts, cities have responded with a proliferation of special assessment districts which directly link taxes and their local public good beneficiaries. Despite this, there is no systematic evidence on the adoption patterns of these districts, likely because they are not surveyed by the U.S. Census of Governments. This paper begins to fill this gap by reporting the results of a survey on the adoption patterns of one class of special assessment districts, Business Improvement Districts (BIDs), in the state of California. A BID is formed when a majority of merchants or property owners in a commercial neighborhood vote in favor of a package of local taxes and expenditures; once passed, assessments are legally binding on all members of the commercial neighborhood. I find that roughly half of all larger cities in California have at least one BID; among the universe of cities in four Southern California counties, that figure falls to about one-fifth. On the demand side, theory and evidence suggest that BIDs should be adopted in heterogeneous cities to supplement local public goods to neighborhood taste. On the supply side, theory argues that BIDs solve the collective action problem arising in the provision of public goods when the number of group members is large. In particular, older commercial neighborhoods have many landowners who may have trouble coordinating the provision of local public goods, in contrast to the single mall developer who can write contracts to internalize externalities. Combining the survey data with demographic, institutional and political data, I find strong support for the supply-side story, and some evidence that the interaction of supply and demand explain BID adoption. |
| JEL: | R5 H7 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:mcl:mclwop:2006-03&r=geo |
| By: | Jens Ludwig; Jeffrey R. Kling |
| Abstract: | Understanding whether criminal behavior is “contagious” is important for law enforcement and for policies that affect how people are sorted across social settings. We test the hypothesis that criminal behavior is contagious by using data from the Moving to Opportunity (MTO) randomized housing-mobility experiment to examine the extent to which lower local-area crime rates decrease arrest rates among individuals. Our analysis exploits the fact that the effect of treatment group assignment yields different types of neighborhood changes across the five MTO demonstration sites. We use treatment-site interactions to instrument for measures of neighborhood crime rates, poverty and racial segregation in our analysis of individual arrest outcomes. We are unable to detect evidence in support of the contagion hypothesis. Neighborhood racial segregation appears to be the most important explanation for across-neighborhood variation in arrests for violent crimes in our sample, perhaps because drug market activity is more common in high-minority neighborhoods. |
| JEL: | H43 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12409&r=geo |
| By: | Robert Baade (Department of Economics and Business, Lake Forest College); Robert Baumann (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross) |
| Abstract: | Professional sports franchises have used the lure of economic riches as an incentive for cities to construct new stadiums and arenas at considerable public expense. An analysis of taxable sales in Florida cities demonstrates that none of the 6 new franchises or 8 new stadiums and arenas in the state since 1980 have resulted in a statistically significant increase in taxable sales in the host metropolitan area. In addition, using the numerous work stoppages in professional sports as test cases, again no statistically significant effect on taxable sales is found from the sudden absence of professional sports due to strikes and lockouts. |
| Keywords: | sports, strikes, economic impact, baseball, football, basketball, hockey, stadiums |
| JEL: | L83 R53 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0609&r=geo |
| By: | Robert Baade (Department of Economics and Business, Lake Forest College); Robert Baumann (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross) |
| Abstract: | Professional sports leagues, franchises, and civic boosters, have used the promise of an all star game or league championship as an incentive for host cities to construct new stadiums or arenas at considerable public expense. Past league-sponsored studies have estimated that Super Bowls, All-Star games and other sports mega-events increase economic activity by hundreds of millions of dollars in host cities. Our analysis fails to support these claims. Our detailed regression analysis of taxable sales in Florida over the period 1980 to 2004 reveals that on, average, mega-events ranging from the World Cup to the World Series have been associated with reductions in taxable sales in host regions of $5 to $10 million per month. Likewise, strikes in Major League Baseball, the National Hockey League, and the National Basketball League, each of which has resulted in the cancellation of large parts of entire seasons, appear to have also had no demonstrable negative effect on taxable sales in host cities. |
| Keywords: | impact analysis, sports, mega-event, championship |
| JEL: | L83 R53 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0610&r=geo |
| By: | Victor Matheson (Department of Economics, College of the Holy Cross); Robert Baade (Department of Economics and Business, Lake Forest College); Mimi Nikolova (Department of Economics and Business, Lake Forest College) |
| Abstract: | Supporters of sports stadium construction often defend taxpayer subsidies for stadiums by suggesting that sports infrastructure can serve as an anchor for local economic redevelopment. Have such promises of economic rejuvenation been realized? The City of Chicago provides an interesting case study on how a new stadium, U. S. Cellular Field, has been integrated into its southside neighborhood in a way that may well have limited local economic activity. This economic outcome stands in stark contrast to Wrigley Field in northern Chicago which continues to experience a synergistic commercial relationship with its neighborhood. |
| Keywords: | sports, stadiums, development, baseball, Chicago, economic impact |
| JEL: | L83 O18 R53 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:spe:wpaper:0614&r=geo |