nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒04‒21
twenty-one papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl By Berliant, Marcus; Wang, Ping
  2. Evolution of regional clusters in nanotechnology. Empirical findings from Germany. By Henn, Sebastian
  3. Price Linkages of Russian Regional Markets By Konstantin Gluschenko
  4. A class of spatial econometric methods in the empirical analysis of clusters of firms in the space By Giuseppe Arbia; Giuseppe Espa; Danny Quah
  5. Endogenous Job Destruction and Job Matching in Cities By Yves Zenou
  6. High Relocation Costs in Search-Matching Models: Theory and Application to Spatial Mismatch By Yves Zenou
  7. Logistics Systems from the Regional Perspective By Enno Lend
  8. Price Mobility of Locations By Konstantin Gluschenko
  9. Condicionantes de la localización del capital productivo en Andalucía: un análisis en el periodo 1980-2000 By Antonio Rafael Peña Sánchez
  10. The Geography and the Effect of Creative People in Germany By Michael Fritsch
  11. Agglomeration and labour productivity in Spanish industry: a long-term analysis By Julio Martinez Galarraga; Elisenda Paluzie Hernandez; Jordi Pons Novell; Daniel Aurelio Tirado Fabregat
  12. The Effect of Location of Finding a Job in the Paris Region By GOBILLON, Laurent; MAGNAC, Thierry; SELOD, Harris
  13. Urban Density and Pupil Attainment By Stephen Gibbons; Olmo Silva
  14. Does sending farmers back to school have an impact? a spatial econometric approach By Satoshi Yamazaki; Budy P. Resosudarmo
  15. Emerging in between: the multi-level governance of renewable energy in the English regions By Adrian Smith
  16. Human Capital, Economic Growth, and Regional Inequality in China By Belton Fleisher; Haizheng Li; Min Qiang Zhao
  17. Sigma Convergence versus Beta Convergence: Evidence from U.S. County-Level Data By Young, Andrew; Higgins, Matthew; Levy, Daniel
  18. Using the global positioning system in household surveys for better economics and better policy By McKenzie, David; Gibson, John
  19. Heterogeneous Convergence By Matthew J. Higgins; Daniel Levy; Andrew T. Young
  20. Location Choices of the Pharmaceutical Industry in Europe after 1992 By Frances Ruane; Xiaoheng Zhang
  21. Federal, State, and Local Governments: Evaluating their Separate Roles in US Growth By Matthew J. Higgins; Daniel Levy; Andrew T. Young

  1. By: Berliant, Marcus; Wang, Ping
    Abstract: The long-term trends of urbanization suggest: not only have more cities formed, but the leading metropolises have grown larger, with a number of peripheral subcenters developing over time. Conventional models of urban growth are limited, in that commuting cost and congestion eventually result in decreasing returns in a monocentric city as population becomes very large. We construct a general-equilibrium model with dynamic interactions between spatial agglomeration and urban development, driven by location-dependent knowledge spillovers. Our contribution allows endogenous development of subcenters to capture benefits from knowledge spillovers and offset diminishing returns from urban congestion, thus permitting more sustained city growth.
    Keywords: Core-Periphery Urban Structure; Agglomerative Production Activity; Endogenous Formation of Cities
    JEL: R12 D51 C78
    Date: 2007–04–17
  2. By: Henn, Sebastian
    Abstract: This article aims at establishing a wider understanding of the evolution of spatial clusters. It will be argued that the potential to generate regional growth is dependent on the way a cluster emerges. Two models of cluster formation will be distinguished in detail – start-up clusters and unrelated spatial concentrations. In its sectoral orientation the study is focused on nanotechnology, a key(technology)-industry said to contribute to new growth spurts in the industrialised world. By analysing the evolution of regional clusters in the Saarland and in Berlin-Brandenburg it will be shown that both types of cluster formation can be found in nanotechnology, demanding different modes of policy intervention.
    Keywords: Cluster; Innovation; Emergence; Evolution; Location; Nanotechnology; Cluster Dynamics; Hightech; Regional Development; Spatial Dynamics
    JEL: R58 R30 R11 O30
    Date: 2006
  3. By: Konstantin Gluschenko
    Abstract: Exploiting time series of the cost of a staples basket across 75 Russian regions over 1994-2000, price linkages of the regions are analyzed with the use of Granger causality as a tool. Price linkages of Russian regions are found extensive: on average, an individual regional market is linked through prices with 62% of others. Neither isolated clusters of regions nor autarkic regions are revealed; each region is linked with all others either directly or indirectly, through a chain of no more than two intermediate regions. Spatial autocorrelation is found to be widespread, taking place in two thirds of regions.
    Keywords: market integration, Granger causality, integration clubs, spatial autocorrelation
    JEL: C22 P22 P23 R12
    Date: 2006–09–01
  4. By: Giuseppe Arbia; Giuseppe Espa; Danny Quah
    Abstract: In this paper we aim at identifying stylized facts in order to suggest adequate models of spatial co–agglomeration of industries. We describe a class of spatial statistical methods to be used in the empirical analysis of spatial clusters. Compared to previous contributions using point pattern methods, the main innovation of the present paper is to consider clustering for bivariate (rather than univariate) distributions, which allows uncovering co–agglomeration and repulsion phenomena between the different industrial sectors. Furthermore we present the results of an empirical application of such methods to a set of European Patent Office (EPO) data and we produce a series of empirical evidences referred to the the pair–wise intra–sectoral spatial distribution of patents in Italy in the nineties. In this analysis we are able to identify some distinctive joint patterns of location between patents of different sectors and to propose some possible economic interpretations.
    Keywords: Agglomeration, Bivariate K–functions, co–agglomeration, Non parametric concentration measures, Spatial clusters, Spatial econometrics
    JEL: C21 D92 L60 O18 R12
    Date: 2007
  5. By: Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA)
    Abstract: We propose a spatial search-matching model where both job creation and job destruction are endogenous. Workers are ex ante identical but not ex post since their job can be hit by a technological shock, which decreases their productivity. They reside in a city and commuting to the job center involves both pecuniary and time costs. Thus, workers with high wages are willing to live closer to jobs to save on time commuting costs. We show that, in equilibrium, there is a one-to-one correspondence between the productivity space and the urban location space since high-productivity workers bid away low-productivity workers in order to occupy locations close to jobs. We also show that in the bargaining process, there is a spatial element in the wage setting since firms need to compensate workers for their spatial costs. Compared to the non-spatial model, the unemployment rate and the reservation productivity are lower and the job-creation rate is higher because the urban space through commuting costs and land rent create additional frictions in the labor market.
    Keywords: job search, commuting costs, wage distribution, urban land use
    JEL: D83 J41 J64 R14
    Date: 2007–03
  6. By: Yves Zenou (Research Institute of Industrial Economics, GAINS, CEPR and IZA)
    Abstract: We develop a standard search-matching model in which mobility costs are so high that it is too costly for workers to relocate when a change in their employment status occurs. We show that, in equilibrium, wages increase with distance to jobs and commuting costs because firms need to compensate the transportation cost difference between the employed and unemployed workers at each location in the city. We also show that the equilibrium land rent is negatively affected by the unemployment benefit because an increase in the latter induce firms to create less jobs, which, in turn, reduces the competition in the land market. We then use this model to provide a mechanism for the observed spatial mismatch between where black workers live and where jobs are. Because blacks and whites differ by their contact rate, we show that the former reside far away from jobs, have higher unemployment rates and lower wages. This is because the housing market amplifies the negative effects of the labor market by creating additional frictions.
    Keywords: search frictions, spatial frictions, efficiency, spatial mismatch hypothesis
    JEL: D83 J15 J64 R14
    Date: 2007–04
  7. By: Enno Lend (Tallinn University of Technology)
    Abstract: Regional development depends on the complex approach to the business environment, where the logistics system can either promote or restrict the economic development at the same time. Logistics and transport system can simultaneously be a promotional factor of the innovation in the regions and it can be itself the subject to technological and process innovation as well. The logistics system of the islands in Western Estonia is an integral business environment re-integrating institutions with particular functions into a coherent entity reacting flexibly to the changes on the market. The main goals of these entities is to ensure time and spatial profitability of the goods and to increase supplementary value and customer satisfaction. The interaction between the economic development and transportation is quite complex. Transportation improvements may result in the growth in the other sectors, ultimately leading to economic growth, but transportation improvements can also have a negative impact. The aim of the present article is to provide a survey of the regional economic considerations and accessibility factors, as well as an empirical case study involving specific Estonian islands. The transport connections between the island and the mainland play a significant role in the sustainable development of the economies on Saaremaa and Hiiumaa. In this paper I would also like to underline the importance of the role played by technology and the personnel.
    Keywords: logistics system, transport connection, accessibility, mobility, interaction.
    JEL: L91 R40
    Date: 2006
  8. By: Konstantin Gluschenko
    Abstract: This paper applies the concept of mobility to cross-location price dynamics. Exploiting data on prices across Russian regions over 1994-2000, a contribution of relative and absolute mobility of regions to price convergence among them is analyzed.
    Keywords: Price dispersion; Price convergence; Mobility; Russian regions
    JEL: P22 R12
    Date: 2006–10–01
  9. By: Antonio Rafael Peña Sánchez (Universidad de Cádiz)
    Abstract: El objetivo de este trabajo ha sido, por un lado, presentar la evolución territorial del crecimiento económico a partir de la contrastación de la hipótesis planteada por la Nueva Geografía Económica referida a la localización espacial de actividades empresariales en las regiones españolas en el periodo 1980-2000; por otro lado, detectar cuáles han sido algunos de los factores que han explicado la concentración regional del stock de capital productivo privado, especialmente en la región andaluza, tales como la eficiencia productiva regional, la localización y especialización de la mano de obra, el tamaño del mercado de consumo y la dotación territorial de infraestructuras.
    Keywords: nivel de infraestructuras, localización de la actividad productiva,convergencia beta, productividad aparente del empleo.
    JEL: O18 R11 R30
    Date: 2007
  10. By: Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin))
    Abstract: This paper investigates the geography and the effect of people in creative occupation in Germany. The population share of the Creative Class as well as of bohemians and artists is relatively high in larger cities, but smaller places and rural regions may also have a considerable proportion of people with a creative job. While ethnical and cultural diversity and a high level of public supply in health care and education can explain the distribution of creative people, employment opportunities seem to play only a minor role. There is a positive statistical relationship between the share of people in creative occupations, the level of new business formation and the innovativeness of regions. A high share of creative occupations seems to be conducive to regional growth; however, the exact nature of this relationship is still unclear.
    Keywords: Creativity, innovation, entrepreneurship, regional development
    JEL: O31 O18 R11
    Date: 2007–03–30
  11. By: Julio Martinez Galarraga; Elisenda Paluzie Hernandez; Jordi Pons Novell; Daniel Aurelio Tirado Fabregat (Universitat de Barcelona)
    Abstract: This paper analyzes the relationship between spatial density of economic activity and interregional differences in the productivity of industrial labour in Spain during the period 1860-1999. In the spirit of Ciccone and Hall (1996) and Ciccone (2002), we analyze the evolution of this relationship over the long term in Spain. Using data on the period 1860-1999 we show the existence of an agglomeration effect linking the density of economic activity with labour productivity in the industry. This effect was present since the beginning of the industrialization process in the middle of the 19th century but has been decreasing over time. The estimated elasticity of labour productivity with respect to employment density was close to 8% in the subperiod 1860-1900, reduces to a value of around 7% in the subperiod 1914-1930, to 4% in the subperiod 1965-1979 and becomes insignificant in the final subperiod 1985-1999. At the end of the period analyzed there is no evidence of the existence of net agglomeration effects in the industry. This result could be explained by an important increase in the congestion effects in large industrial metropolitan areas that would have compensated the centripetal or agglomeration forces at work. Furthermore, this result is also consistent with the evidence of a dispersion of industrial activity in Spain during the last decades.
    Keywords: agglomeration economies, regional disparities, spanish economic history
    JEL: N12 O4 R1
    Date: 2007
  12. By: GOBILLON, Laurent; MAGNAC, Thierry; SELOD, Harris
    JEL: C41 J64 R23
    Date: 2007–02
  13. By: Stephen Gibbons (CEP, London School of Economics); Olmo Silva (CEP, CEE, London School of Economics and IZA)
    Abstract: We explore the association between urban density and pupil attainment using three cohorts of pupils in schooling in England. Although - as widely recognised - attainment in dense urban places is low on average, this is not because urban environments disadvantage pupils, but because the most disadvantaged pupils with low average attainments attend the most urbanised schools. To control for this, we exploit changes in urban density faced by pupils during compulsory transition from Primary to Secondary school, and measure educational progress at the end of the Secondary phase, relative to attainment at the end of Primary schooling. Our results suggest that there are small but significant benefits from education in schools in more densely urbanised settings. We detect this density advantage even amongst pupils moving relatively short distances between Primary and Secondary schools within urban areas, so we cannot attribute it to broad urbanisation effects experienced by pupils making rural-urban school moves. A more likely explanation lies in greater school choice and competition between closely co-located educational providers.
    Keywords: urban density and agglomeration, school choice and competition, pupil achievement
    JEL: I20 R20 J24
    Date: 2007–04
  14. By: Satoshi Yamazaki; Budy P. Resosudarmo
    Abstract: The Farmer Field School (FFS) is an intensive training program providing farmers with science based knowledge and practices, including integrated pest management (IPM). Recently there has been intensive debate as to whether or not this kind of training has any significant impact. Most case studies argue that the impact, in terms of a farmer’s ability to reduce the use or pesticides while increasing yields, is significant. However, studies conducted by Feder et al., using a household panel data set for Indonesia, could not confirm that this is the case. This paper utilizes Feder et al.’s data set and applies a modified model specification and a spatial econometric technique to re-evaluate whether or not the FFS induces better performances among farmers enrolled in the program and also among their neighbors, who are expected to receive some spillover knowledge from the FFS alumna.
    Keywords: agricultural economics, spatial econometrics, economic development
    JEL: Q12 C59 O13
    Date: 2007
  15. By: Adrian Smith (SPRU, University of Sussex)
    Keywords: multi-level governance, renewable energy, English regions
    JEL: O30 Q20
    Date: 2007–04–13
  16. By: Belton Fleisher (Ohio State University and IZA); Haizheng Li (Georgia Institute of Technology); Min Qiang Zhao (Ohio State University)
    Abstract: We study the dispersion in rates of provincial economic- and TFP growth in China. Our results show that regional growth patterns can be understood as a function of several interrelated factors, which include investment in physical capital, human capital, and infrastructure capital; the infusion of new technology and its regional spread; and market reforms, with a major step forward occurring following Deng Xiaoping’s "South Trip" in 1992. We find that FDI had much larger effect on TFP growth before 1994 than after, and we attribute this to emergence of other channels of technology transfer when marketization accelerated. We find that human capital positively affects output per worker and productivity growth. In particular, in terms of its direct contribution to production, educated labor has a much higher marginal product. Moreover, we estimate a positive, direct effect of human capital on TFP growth. This direct effect is hypothesized to come from domestic innovation activities. The estimated spillover effect of human capital on TFP growth is positive and statistically significant, which is very robust to model specifications and estimation methods. The spillover effect appears to be much stronger before 1994. We conduct cost-benefit analysis and a policy "experiment," in which we project the impact increases in human capital and infrastructure capital on regional inequality. We conclude that investing in human capital will be an effective policy to reduce regional gaps in China as well as an efficient means to promote economic growth.
    Keywords: regional inequality, TFP growth, FDI, human capital, technology spillovers
    JEL: O15 O18 O47 O53
    Date: 2007–03
  17. By: Young, Andrew; Higgins, Matthew; Levy, Daniel
    Abstract: In this paper we outline (i) why sigma-convergence may not accompany beta-convergence, (ii) discuss evidence of beta-convergence in the U.S., and (iii) use U.S. county-level data containing over 3,000 cross-sectional observations to demonstrate that sigma-convergence cannot be detected at the county-level across the U.S., or within the large majority of the individual U.S. states considered separately. Indeed, in many cases statistically significant sigma-divergence is found.
    Keywords: sigma-convergence; beta-convergence; Solow growth model; speed of convergence; balanced growth; U.S. county-level data; income distribution; Gini coefficient; income equality
    JEL: O40 O18 R11 O11 H70
    Date: 2007–04–12
  18. By: McKenzie, David; Gibson, John
    Abstract: Distance and location are important determinants of many choices that economists study. While these variables can sometimes be obtained from secondary data, economists often rely on information that is self-reported by respondents in surveys. These self-reports are used especially for the distance from households or community centers to various features such as roads, markets, schools, clinics, and other public services. There is growing evidence that self-reported distance is measured with error and that these errors are correlated with outcomes of interest. In contrast to self-reports, the Global Positioning System (GPS) can determine almost exact location (typically within 15 meters). The falling cost of GPS receivers (typically below US$100) makes it increasingly feasible for field surveys to use GPS as a better method of measuring location and distance. In this paper the authors re view four ways that GPS can lead to better economics and better policy: (1) through constructing instrumental variables that can be used to understand the causal impact of policies, (2) by helping to understand policy externalities and spillovers, (3) through better understanding of access to services, and (4) by improving the collection of household survey data. They also discuss several pitfalls and unresolved problems with using GPS in household surveys.
    Keywords: Transport Economics Policy & Planning,Roads & Highways,Health Monitoring & Evaluation,Standards and Technical Regulations,Population Policies
    Date: 2007–04–01
  19. By: Matthew J. Higgins; Daniel Levy; Andrew T. Young
    Abstract: We use US county-level data containing 3,058 cross-sectional observations and 41 conditioning variables to study economic growth and explore possible heterogeneity in growth determination across 32 individual states. Using a 3SLS-IV estimation method, we find that the convergence rates for 32 individual states are above 2 percent, with an average of 8.1 percent. For 7 states the convergence rate can be rejected as identical to at least one other state’s convergence rate with 95 percent confidence. Convergence rates are negatively correlated with initial income. The size of government at all levels of decentralization is either unproductive or negatively correlated with growth. Educational attainment has a non-linear relationship with growth. The size of the finance, insurance and real estate, and entertainment industries are positively correlated with growth, while the size of the education industry is negatively correlated with growth. Heterogeneity in the effects of balanced growth path determinants across individual states is harder to detect than in convergence rates.
    Date: 2006–11
  20. By: Frances Ruane; Xiaoheng Zhang
    Abstract: Differences in regulations,technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU.Using discrete choice models, we study separately the determinants of multinational location choices in terms of expanded production at existing facilities and location of start-up firms.Our results support the findings of models which predict reduced rather than increased agglomeration in the face of trade-cost reductions.
    Date: 2007–04–17
  21. By: Matthew J. Higgins; Daniel Levy; Andrew T. Young
    Abstract: We use US county level data (3,058 observations) from 1970 to 1998 to explore the relationship between economic growth and the size of government at three levels: federal, state and local. Using 3SLS-IV estimation we find that the size of federal, state and local government all either negatively correlate with or are uncorrelated with economic growth. We find no evidence that government is more efficient at more or less decentralized levels. Furthermore, while we cannot separate out the productive and redistributive services of government, we document that the county-level income distribution became slightly wider from 1970 to 1998. Our findings suggest that a release of government-employed labor inputs to the private sector would be growth-enhancing.
    Date: 2006–11

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