nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒02‒24
sixteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Effects of Public Capital on Regional Convergence in Turkey By Özlem Önder; Metin Karadag; Ertugrul Deliktas
  2. Geographical distribution of unemployment: an analysis of provincial differences in Italy By Cracolici, M. Francesca; Cuffaro, Miranda; Nijkamp, Peter
  4. Labour Market Flexibility and Regional Unemployment Rate Dynamics: Spain 1980-1995 By Roberto Bande; Marika Karanassou
  5. Intra-distribution dynamics of regional per-capita income in Europe: evidence from alternative conditional density estimators By Roberto Basile
  6. Regional Versus Individual Aspects of the Digital Divide in Germany By Katrin Schleife
  7. The Spillover Effects of Public Capital Formation on the Manufacturing Industry in the Turkish Geographical Regions By Ertugrul Deliktas; Özlem Önder; Metin Karadag
  8. Are Shirking and Leisure Substitutable? An Empirical Test of Efficiency Wages based on Urban Economic Theory By Ross, Stephen; Zenou, Yves
  9. Ethnicity and Spatial Externalities in Crime By Patacchini, Eleonora; Zenou, Yves
  10. Down, Set, Hike: The Economic Impact of College Football Games on Local Economies By Robert Baade; Robert Baumann; Victor Matheson
  11. Social Interactions and Labour Market Outcomes in Cities By Zenou, Yves
  12. Urban Unemployment in England By David Metcalf
  13. Metropolitan Statistical Area Designation: Aggregate and Industry Growth Impacts By George W. Hammond; Brian J. Osoba
  14. Male-Female Wage Differentials in Urban Labor Markets. By Ronald Oaxaca
  15. District leaders as open networks: emerging business strategies in Italian industrial districts By Eleonora Di Maria; Stefano Micelli
  16. Neighborhood effects in economic growth By Josep M. Vilarrubia

  1. By: Özlem Önder; Metin Karadag; Ertugrul Deliktas (Department of Economics, Ege University)
    Abstract: In recent years there have been many studies that explore the impact of public capital formation on economic growth at regional level, because public capital might give rise to reducing regional disparities across regions. Regarding Turkey, investigating the effects of public capital on economic convergence at the regional level gains importance since significant regional disparities exist between the regions. This study attempts to explore the dynamic effects of public capital on output per capita in terms of convergence in the Turkish regions. A conditional convergence model based on per capita GDP and public capital is estimated using the panel data set of Turkish regions at NUTS 1 level for the time period 1980-2001. The spatial effects are also investigated. The results show that there exists conditional convergence. The results also reveal that in some of the models public capital has a positive and significant effect on output per capita. However, in the models with spatial effects the public capital does not have a significant effect on regional convergence.
    Keywords: Regional development, public capital, convergence, Turkish regions, spatial effects
    JEL: H54 R11
    Date: 2007–01
  2. By: Cracolici, M. Francesca (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Cuffaro, Miranda; Nijkamp, Peter
    Abstract: Unemployment rates appear to vary widely at the subregional (e.g. local or provincial) level. Using spatial econometric models for spatial autocorrelation, this paper focuses attention on the spatial structure of regional unemployment disparities of Italian provinces. On the basis of findings from the economic literature and of the available socio-economic data, various model specifications including different explanatory variables are tested to investigate the geographical distribution of unemployment in the 103 provinces of Italy for the year 2003. The results suggest that there is a significant degree of spatial dependence among labour markets at the provincial level in Italy. Provinces marked by high unemployment, as well as those characterized by low unemployment, tend to be spatially clustered, demonstrating the presence of spatial persistency.
    Keywords: Regional unemployment; ESDA; Spatial lag model; Italian provinces
    JEL: C21 J60 J64 R12 R23
    Date: 2007
  3. By: A. Rodriguez-Pose; Riccardo Crescenzi
    Abstract: Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: a) the analysis of the link between investment in R&D, patents, and economic growth; b) the study of the existence and efficiency of regional innovation systems; and c) the examination of geographical diffusion of regional knowledge spillovers. These complementary approaches have, however, rarely been combined. Important operational and methodological barriers have thwarted any potential crossfertilization. In this paper, we try to fill this gap in the literature by combining in one model R&D, spillovers, and innovation systems approaches. A multiple regression analysis is conducted for all regions of the EU-25, including measures of R&D investment, proxies for regional innovation systems, and knowledge and socio-economic spillovers. This approach allows us to discriminate between the influence of internal factors and external knowledge and institutional flows on regional economic growth. The empirical results highlight how the interaction between local and external research with local and external socio-economic and institutional conditions determines the potential of every region in order to maximise its innovation capacity. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers show strong distance decay effects. In the EU-25 context, only the innovative efforts pursued within a 180 minute travel radius have a positive and significant impact on regional growth performance.
    Keywords: Economic growth, innovation, R&D, knowledge, spillovers,
    JEL: R11 R12 R58
    Date: 2006–01
  4. By: Roberto Bande (Universtity of Santiago and IDEGA); Marika Karanassou (Queen Mary, University of London and IZA)
    Abstract: This paper aims to shed light in the dynamics of Spanish regional unemployment rates and determine the driving forces of their disparities. The Spanish economy has one of the highest unemployment rates in the EU and is characterised by severe regional disparities. We apply the chain reaction theory of unemployment according to which the evolution of unemployment is driven by the interplay of lagged adjustment processes and the spillover effects within the labour market system. Our model includes nationwide as well as regionspecific variables, and takes into account the limited labour and firm mobility in Spain. We show that the degree of labour market flexibility differs between high and low unemployment regions, and find that investment has a major influence on the unemployment trajectory. In addition, we find that in bad times high unemployment regions are hit more severely than low unemployment regions, while in good times high unemployment regions do not benefit as much as low unemployment regions.
    Keywords: regional disparities, unemployment, spillover effects, labour market, lagged adjustment processes
    JEL: R23 J64
    Date: 2007–01
  5. By: Roberto Basile (ISAE - Institute for Studies and Economic Analyses)
    Abstract: This paper compares different conditional density estimators to analyze the cross-sectional distribution dynamics of regional per-capita incomes in Europe during the period 1980-2002. First, a kernel estimator with fixed bandwidth gives evidence of convergence. With a modified estimator with variable bandwidth and mean-bias correction, the dominant income dynamics is that of persistence and lack of cohesion: only a fraction of very poor regions improves its position over time converging towards a low relative income. An alternative graphical technique (more informative than the traditional contour plot) is also proposed to visualize conditional densities. Finally, a first-order spatial autoregressive model is applied to estimate the effect of spatial dependence on the evolution of income distribution.
    Keywords: Intra-distribution dynamics, Conditional density estimators, Convergence, European regions, Spatial dependence
    JEL: R11 C14 C21
    Date: 2007–01
  6. By: Katrin Schleife (ZEW Mannheim, Centre for European Economic Research, Research Group Information and Communication Technologies)
    Abstract: This paper analyzes the regional dimension of the German digital divide. It considers the impact of regional characteristics on differences in the share of Internet use between German counties. In addition, it studies the influence of regional factors as well as individual characteristics on the individual probability of becoming a new Internet user. Based on two large data sets, SOEP and INKAR, the analyses show that it is not the rusticity of a region itself that explains regional differences in Internet use. The results rather indicate that it is the different composition of the population between rural and urban areas that accounts for the regional digital divide.
    Keywords: digital divide, Internet use, regional differences
    JEL: O33 O18 R20
    Date: 2006–12
  7. By: Ertugrul Deliktas; Özlem Önder; Metin Karadag (Department of Economics, Ege University)
    Abstract: This paper investigates the spillover effects of public capital formation on the Turkish private manufacturing industry at the regional level over the period 1980-2000. The aggregate effects of public capital cannot be captured entirely from the direct effects of public capital installed in the region itself. Therefore, we estimate vector autoregression (VAR) models for the seven geographical regions of Turkey by including capital formation installed outside of the region. The results show that public capital affects private sector performance positively in all regions apart from Central Anatolia. Positive spillover effects of public capital can be seen in some regions, like Marmara.
    Keywords: Regional development, public capital, spillover effects, vector autoregression, Turkish manufacturing industry.
    JEL: C32 L60 R00
    Date: 2007–02
  8. By: Ross, Stephen; Zenou, Yves
    Abstract: Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioural substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labour market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable.
    Keywords: efficiency wage; leisure; urban unemployment
    JEL: J41 R14
    Date: 2007–02
  9. By: Patacchini, Eleonora; Zenou, Yves
    Abstract: We develop a model where the decision to commit a crime in a neighboring area is a positive function of the percentage of same-race individuals residing in that area since they can provide crucial information on crime possibilities. The model then predicts a positive spatial correlation in crime between different contiguous areas; this correlation is higher the closer the distance between the areas. We empirically investigate these relationships using data from the crime statistics that are recorded by the police in Britain. We find results that are consistent with the model. In particular, the agglomeration of a given ethnic minority group is positively related to its crime activity and this effect declines quite sharply with distance between areas.
    Keywords: crime; ethnic minorities; social interactions
    JEL: C23 K42 R12
    Date: 2007–02
  10. 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: This paper provides an empirical examination of the economic impact of spectator sports on local economies. Confirming the results of other ex post analyses of sports in general, this paper finds no statistically significant evidence that college football games in particular contribute positively to a host’s economy. Our analysis from 1970-2004 of 63 metropolitan areas that play host to big-time college football programs finds that neither the number of home games played, the winning percentage of the local team, nor winning a national championship has a discernable impact on either employment or personal income in the cities where the teams play. While successful college football teams may bring fame to their alma mater, fortune appears to be a bit more elusive.
    Keywords: sports, football, college sports, impact analysis, mega-event
    JEL: L83 I20 O18 R11
    Date: 2007–02
  11. By: Zenou, Yves
    Abstract: We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business centre to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We extend this framework to incorporate black and white workers. Because whites obtain a higher wage than blacks, they reside closer to jobs to save on commuting time costs. As a result, black workers experience a higher unemployment rate than white workers because they have little contact with weak ties (especially whites) and thus have limited access to job information, relying mainly on their strong ties, who are themselves likely to be unemployed. The lack of ties that act as diverse sources of information is therefore the main cause of blacks' unemployment.
    Keywords: labour market; land rent; social networks; spatial mismatch; weak ties
    JEL: A14 J15 R14
    Date: 2007–02
  12. By: David Metcalf
  13. By: George W. Hammond (Bureau of Business and Economic Research, West Virginia University); Brian J. Osoba (Institute for Policy & Economic Development, University of Texas at El Paso)
    Abstract: The federal Office of Management and Budget’s (OMB) periodic release of updated metropolitan statistical area (MSA) definitions frequently garners significant attention from local economic development professionals and policymakers. The interest is grounded, in part, in the common belief that the designation of a region as a new MSA will spur its subsequent growth. The purpose of this paper is to test the hypothesis that the MSA designation influences local growth, using Office of Management and Budget (OMB) designations released since 1980 and data on per capita personal income, population, and employment. Based on results from several methods, including quasiexperimental matching, we find little evidence that the MSA designation has a significant impact on long-term employment or per capita income growth. However, we do find some evidence in favor of a short-run impact on aggregate employment growth and more significant impacts on population growth. We disaggregate employment and find significant short-run impacts on transportation and utilities; retail trade; and government. We find longer-term impacts on services and finance, insurance, and real estate employment growth.
    Keywords: metropolitan statistical area, MSA designation, economic impact; industry employment
    Date: 2007
  14. By: Ronald Oaxaca
  15. By: Eleonora Di Maria (University of Padova); Stefano Micelli (University of Venice)
    Abstract: Italian industrial districts are no longer self-contained systems of small firms, where firms' competitiveness is the result of physical proximity and links with global economy are limited to export sales. A new generation of firms is taking the lead, reshaping the form of districts through their innovative strategies focused on R&D, design and ICT. Most of these firms are leaders within their markets and organize their value chains by coupling district knowledge and competencies with opportunities offered by globalization processes. The rise of these open networks contributes to the transformation of industrial districts and the real drivers of the district firm's competitiveness. Based on a survey of 650 Italian SMEs from 41 Italian districts, the paper describes the characteristics of this new firm model, compared to the traditional district one. The paper also discusses implications for districts in terms of innovation dynamics and governance.
    Keywords: district firms, open networks, global value chain, innovation, governance
    Date: 2007–02
  16. By: Josep M. Vilarrubia (Banco de España)
    Abstract: One of the most striking features of the world economy is that wealthy countries are clustered together. This paper theoretically and empirically explains a mechanism for this clustering by extending the Acemoglu and Ventura model so that it takes real geography into account. Countries close to fast growing economies experience faster growth in aggregate demand for their exports, stimulating faster domestic growth. As a result, a poor country that is surrounded by other poor countries finds it more difficult to grow because its terms of trade shift against it. When this model is estimated on data for 1965 to 1985, we find statistically and economically significant effects. If the typical European country were located in Africa, these terms of trade effects would have lowered its growth rate by almost 1 percentage point per year. The results strongly suggest that it is very difficult to raise income in poor countries without dealing with regional problems.
    Keywords: economic growth, economic geography, international trade, terms of trade, empirical
    JEL: F12 F15 F43 O11 O19
    Date: 2006–10

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