nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒02‒10
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The spatial sorting and matching of skills and firms By Mion, Giordano; Naticchioni, Paolo
  2. Growth Effects of Spatial Redistribution Policies By Calin Arcalean; Gerhard Glomm; Ioana Schiopu
  3. Urban income inequality in China revisited (1988–2002) By Sylvie Demurger; Martin Fournier; Shi Li
  4. The Determinants of New-firm Survival across Regional Economies By Zoltan J. Acs; Catherine Armington; Ting Zhang
  5. Regional Data in the German Socio-Economic Panel Study (SOEP) By Gundi Knies; C. Katharina Spieß
  6. Employment protection and regional worker flows in Italy By Naticchioni, Paolo; Rustichelli, Emiliano; Scialà, Antonio
  7. Efficiency in housing markets: do home buyers know how to discount? By Erik Hjalmarsson; Randi Hjalmarsson
  8. Power properties of invariant tests for spatial autocorrelation in linear regression By Martellosio, Federico
  9. The correlation structure of spatial autoregressions on graphs By Martellosio, Federico
  10. "Bayesian Model Averaging for Spatial Econometric Models " By Olivier Parent; James P. Lesage
  11. Black Populations and Economic Growth: An Extreme Bounds Analysis of Mississippi County-Level Data By Young, Andrew; Higgins, Matthew; Levy, Daniel
  12. Multi-Level governance: Towards an analysis of renewable energy governance in the English regions By Adrian Smith
  13. Labour Mobility, Capital-Skill Complementarity and the Redistributive Effects of Trade Integration By Carlo Devillanova; Michele Di Maio; Pietro Vertova

  1. By: Mion, Giordano; Naticchioni, Paolo
    Abstract: Using a matched employer-employee database for Italy we look at the spatial distribution of wages across provinces. This rich database allows us to contribute at opening the black box of agglomeration economies exploiting the micro dimension of the interaction among economic agents, both individuals and firms. We provide evidence that firm size and particularly skills are sorted across space, and explain a large portion of the spatial wage variation that could otherwise be attributed to aggregate proxies of agglomeration externalities. Our data further support the assortative matching hypothesis, that we show not to be driven by co-location of "good" workers and firms. Finally, we point out that this assortative matching is negatively related to local market size.
    Keywords: Spatial Externalities; Panel-Data; Skills; Firms' Heterogeneity; Sorting; Matching.
    JEL: J31 R30 J61 R23
    Date: 2007–02
  2. By: Calin Arcalean (Indiana University); Gerhard Glomm (Indiana University); Ioana Schiopu (Indiana University)
    Abstract: We develop a two-region, two sector model with migration and public investment in infrastructure and education. In a numerical example calibrated to Portugal, we find that the structural funds can improve the growth rate of the lagging region and slightly reduce the regional inequality, without necessarily producing convergence. When the mix of national public investment departs from optimum, the allocation of supra-national funds across infrastructure and public education can partially offset this national sub-optimality. We also find that the short-run growth-maximizing mix is different from the long-run mix. Moreover, the rich region has an incentive to bias the allocation of structural funds towards human capital formation.
    Keywords: endogenous growth, spatial redistribution, regional policy, European Union
    JEL: H7 R12 R58
    Date: 2007–01
  3. By: Sylvie Demurger (HIEBS - Hong Kong Institute of Economics and Business Strategy - [The Hong Kong University]); Martin Fournier (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines]); Shi Li (School of Economics and Business - [Beijing Normal University])
    Abstract: Using newly available spatial price deflators, this paper shows that inequality evaluations in the literature<br />overstate the magnitude of inequality and inequality changes in China, as well as the role played by regional differences in the recent inequality rise.
    Keywords: Inequality; China; Spatial price deflators; Inequality decomposition
    Date: 2007–01–30
  4. By: Zoltan J. Acs; Catherine Armington; Ting Zhang
    Abstract: Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods.
    Keywords: New-Firm Survival, Human Capital, Knowledge Spillovers, Entrepreneurship, Labor Market Area
    JEL: J24 L80 M13 O3 R1
    Date: 2006–12
  5. By: Gundi Knies; C. Katharina Spieß
    Keywords: self-employment, entrepreneurship, entry rate, start-ups, unemployment, pseudo-panel, age and cohort effects
    Date: 2007
  6. By: Naticchioni, Paolo; Rustichelli, Emiliano; Scialà, Antonio
    Abstract: In this paper we point out that the theoretical predictions concern-ing Employment Protection Legislation (EPL) are not fully confirmed by empirical evidence in Italy, a strict EPL country in the nine-ties, according to OECD indexes. In particular, worker and job flow rates are remarkably high, also in comparison with the other Euro-pean countries. Furthermore, the differences in regional worker flow rates -computed on both the social security database and the LFS- are relevant, no matter which measure of worker flows is considered. While EPL is the same across regions, the highest worker flow rates are observed in the South, an area generally recognised as the least dynamic of the country, followed by the Northeast, the Centre and the Northwest. For possible alternative explanations of regional differences investigation focuses on economic structural composi-tion, the black labour market, non-standard contracts, the public sector and self-employment incidence, labour productivity and firm seniority. Using Logit estimates we find that none of these factors can fully explain these differences. Moreover, the predicted nega-tive relation between worker flows and unemployment duration does not seem to hold in the case of Italy.
    Keywords: Worker Turnover and Reallocation; Employment Protection; Regional Economics; Italy.
    JEL: J65 J68 R1 J63
    Date: 2006–10
  7. By: Erik Hjalmarsson; Randi Hjalmarsson
    Abstract: We test for efficiency in the market for Swedish co-ops by examining the negative relationship between the sales price and the present value of future rents. If the co-op housing market is efficient, the present value of co-op rental payments due to underlying debt obligations of the cooperative should be fully reflected in the sales price. However, we find that, on average, a one hundred kronor increase in the present value of future rents only leads to a 45 to 65 kronor reduction in the sales price; co-ops with higher rents are thus relatively overpriced compared to those with lower rents. Our analysis indicates that pricing tends to be more efficient in areas with higher educated and wealthier buyers. By relying on cross-sectional relationships in the data, our results are less sensitive to transaction costs and other frictions than time-series tests of housing market efficiency.
    Date: 2006
  8. By: Martellosio, Federico
    Abstract: Many popular tests for residual spatial autocorrelation in the context of the linear regression model belong to the class of invariant tests. This paper derives some exact properties of the power function of such tests. In particular, we characterize the circumstances under which the limiting power, as the autocorrelation increases, vanishes, thus extending the work of Krämer (2005, Journal of Statistical Planning and Inference 128, 489-496). More generally, the analysis in the paper sheds new light on how the power of invariant tests for spatial autocorrelation is affected by the matrix of regressors and by the spatial structure. A numerical study aimed at assessing the practical relevance of the theoretical results is included.
    Keywords: Cliff-Ord test; invariant tests; linear regression model; point optimal tests; power; similar tests; spatial autocorrelation
    JEL: C21 C12
    Date: 2006–12
  9. By: Martellosio, Federico
    Abstract: This paper studies the correlation structure of spatial autoregressions defined over arbitrary configurations of observational units. We derive a number of new properties of the models and provide new interpretations of some of their known properties. A little graph theory helps to clarify how the correlation between two random variables observed at two units depends on the walks connecting the two units, and allows to discuss the statistical consequences of the presence (or, more importantly in econometrics, the absence) of symmetries or regularities in the configuration of the observational units. The analysis is centered upon one-parameter models, but extensions to multi-parameter models are also considered.
    Keywords: exponential families; graphs; quadratic subspace; spatial autoregressions; spatial weights matrices
    JEL: C21 C50
    Date: 2006–10–16
  10. By: Olivier Parent; James P. Lesage
    Abstract: We extend the literature on Bayesian model comparison for ordinary least-squares regression models to include spatial autoregressive and spatial error models. Our focus is on comparing models that consist of different matrices of explanatory variables. A Markov Chain Monte Carlo model composition methodology labelled MC to the third by Madigan and York (1995) is developed for two types of spatial econometric models that are frequently used in the literature. The methodology deals with cases where the number of possible models based on different combinations of candidate explanatory variables is large enough that calculation of posterior probabilities for all models is difficult or infeasible. Estimates and inferences are produced by averaging over models using the posterior model probabilities as weights, a procedure known as Bayesian model averaging. We illustrate the methods using a spatial econometric model of origin-destination population migration flows between the 48 US States and District of Columbia during the 1990 to 2000 period.
    Date: 2007
  11. By: Young, Andrew; Higgins, Matthew; Levy, Daniel
    Abstract: We use Mississippi county-level data on (per capita) income and the percentages of populations that are Black (henceforth "Black") to examine the relationship between race and economic growth. The analysis is also conditioned on 40 other economic and socio-demographic variables. Given a negative and statistically significant partial correlation between income growth and Black, we ask if it is robust to exhaustive combinations of other conditioning variables (taken 3 at a time). The evidence suggests yes. Since even robust correlation does not imply causation, we then ask if other robust correlates with income growth play a roll in accounting for Black in the data. The answer “yes” is obtained for only one other robust correlate of the "right" sign: the percentage of a population that is below the poverty level.
    Keywords: Racial Inequalities; Black Populations; Solow Growth Model; Speed of Convergence; U.S. County-Level Data; Extreme Bounds Analysis
    JEL: O40 O18 O11 R11
    Date: 2007–01–29
  12. By: Adrian Smith (SPRU, University of Sussex)
    Keywords: governance, renewable energy
    JEL: Q48 Q28
    Date: 2007–02–01
  13. By: Carlo Devillanova (Bocconi University, Milano, Italy.); Michele Di Maio (University of Macerata, Italy.); Pietro Vertova (University of Bergamo, Italy.)
    Abstract: This paper addresses the role of mobility costs in shaping the effects of trade integration on wage inequality and welfare. We present a three-factor, two-sector model in which the production technology exhibits capital-skill complementarity and the cost of moving across sectors differs between unskilled and skilled workers. We consider a proportional tax on skilled workers’ wage that is used to finance a re-training program to reduce the mobility costs of unskilled workers. We show that if the training program is sufficiently effective, a positive tax rate can both reduce wage inequalities and reinforce the welfare-enhancing effects of trade integration. In addition we show that, even when the public programme entails some welfare losses, it can make trade integration Pareto superior with respect to autarky.
    Keywords: Capital-Skill Complementarity, Intersectoral Labour Mobility, Wage In-equality, Trade Integration.
    JEL: E24 J31 R23
    Date: 2006–11

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