nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒05‒19
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Innovation, Dynamic Regions and Regional Dynamics By Karlsson, Charlie; Andersson, Åke E; Cheshire, Paul; Stough, Roger R
  2. A new measure of local endowments of transport infrastructures By Giovanna Messina
  3. Urban growth and decline in Europe By Maarten Bosker; Gerard Marlet
  4. Inside the Black Box of Regional Development - human capital, the creative class and tolerance By Florida, Richard; Mellander, Charlotta; Stolarick, Kevin
  5. The Ebb and Flow of Comparative Advantage: Trade and the Industrial Specialization of Canadian Manufacturing Regions, 1974 to 1999 By Brown, W. Mark
  6. Spatial asymmetric duopoly with an application to Brussels’ airports By Fay Dunkerley; André de Palma; Stef Proost
  7. Regional Unemployment Disparities: An Evaluation of Policy Measures By Nicolaas Groenewold; Alfred Hagger
  8. Downtown Parking in Auto City By Richard Arnott; John Rowse
  9. Industrial Clusters in India: Evidence from Automobile Clusters in Chennai and the National Capital Region By Okada, Aya; Siddharthan, N.S.
  10. Structural Change under New Labour By Coutts, K.; Glyn, A.; Rowthorn, B.
  11. The Flowchart Model of Cluster Policy: The Automobile Industry Cluster in China By Kuchiki, Akifumi
  12. Spatial models for flood risk assessment By Marco Bee; Roberto Benedetti; Giuseppe Espa
  13. Does Welfare Policy Affect Residential Choices? Evidence from a Natural Experiment By Jon H. Fiva
  14. What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns By William Kerr; Edward Glaeser; Glenn Ellison
  15. Health and the Evolution of Welfare across Brazilian Municipalities By Rodrigo R. Soares

  1. By: Karlsson, Charlie (Jönköping International Business School (JIBS) and CESIS); Andersson, Åke E (Jönköping International Business School (JIBS) and CESIS); Cheshire, Paul (London School of Economics (LSE)); Stough, Roger R (George Mason University (GMU))
    Abstract: This paper analyses the aspects of spatial economics that deals with innovation, regional specialization and dynamic systems of functional regions and in particular the contributions made by the economist Börje Johansson. The innovation aspect consists of innovation networks, knowledge sources and knowledge sinks, cost and innovation of product characteristics and innovation at the industry and sector level. In the regional specialization part the infrastructure, regional economic milieus, the specialization of regions and specific the specialization in small and large regions, spatial transaction costs, and endogenous specialization are subjects that are being treated. Regional dynamics consists of location dynamics in a system of functional urban regions where different theories are being discussed as the spatial product life cycle theory and filtering-down theory. The last part does also take up lead-lag models.
    Keywords: innovation; regional; specialization; dynamic systems; functional regions
    JEL: O18 O31 R10
    Date: 2007–04–18
  2. By: Giovanna Messina (Banca d'Italia, Servizio Studi)
    Abstract: The aim of this study is to develop a new method to measure local endowments of transport infrastructures. Starting from the analytical approach of the “new economic geography”, which emphasizes the role of spatial location in determining the growth performance of an economy, it is possible to build a system of indicators which include the effect of the speed and of the quality of transport infrastructures as well as of their physical stock. The new technique is applied to Italian provinces in order to study the action of road and rail transport in the different areas of the country.
    Keywords: new economic geography, transport infrastructures, market potential
    JEL: R12 R40 R58
    Date: 2007–04
  3. By: Maarten Bosker; Gerard Marlet
    Abstract: In this paper we examine growth differences between European cities. We have used the Urban Audit, a rather new dataset from Eurostat. After clarifying the merits of this dataset as well as some of its limitations, we provide some detailed characteristics of city growth in the European Union. This shows that urban growth in the EU is pretty persistent and is still, in spite of further European integration, largely driven by growth of national born population; non-national European born and non-European born migrants contribute only marginally to urban growth differentials. Moreover differences in birth rates explain a substantial part of the variation in (national-born population) growth rates. Controlling for these differences in birth rates, we look for the determinants of migration-driven European city growth relative to average city growth in the EU as a whole as well as to average national city growth, meanwhile distinguishing between national, non-national EU and non-EU population growth. Our results suggest that, by and large, the smaller, less dense, safer, amenity-rich cities with high levels of GDP per capita are growing fastest. When focussing on national, EU and non-EU population growth, we moreover find that nationals are attracted to the less dense, amenity-rich, more productive cities; that EU nonnationals are concentrated in cities with high levels of human capital; and that non-EU population growth is determined by climate and by employment structure.
    Keywords: European urban growth
    JEL: R00 R11 O18
    Date: 2006–11
  4. By: Florida, Richard (George Mason University, US); Mellander, Charlotta (Jönköping International Business School (JIBS) and CESIS); Stolarick, Kevin (Carnegie Mellon University , US)
    Abstract: While there is a general consensus on the importance of human capital to regional development, debate has emerged around two key issues. The first involves the efficacy of educational versus occupational measures (i.e. the creative class) of human capital, while the second revolves around the factors that effect its distribution. We use structural equation models and path analysis to examine the effects of these two alternative measures of human capital on regional income and wages, and also to isolate the effects of tolerance, consumer service amenities, and the university on its distribution. We find that human capital and the creative class effect regional development through different channels. The creative class outperforms conventional educational attainment measures in accounting for regional labor productivity measured as wages, while conventional human capital does better in accounting for regional income. We find that tolerance is significantly associated with both human capital and the creative class as well as with wages and income.
    Keywords: Human Capital; Creative Class; Tolerance; Wages; Income; Regional Development
    JEL: J24 O30 R10 R20
    Date: 2007–04–18
  5. By: Brown, W. Mark
    Abstract: Utilizing a longitudinal micro data file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade on the level of industrial specialization experienced by regional manufacturing economies. Consistent with trade driven by comparative advantage, the analysis demonstrates that higher levels of export intensity (exports as a share of output) across regions are associated with greater industrial specialization. However, the analysis also shows that changes in export intensity are only weakly associated with changes in specialization. This occurs because comparative advantage tends to shift away from industries that account for a large share of regional manufacturing employment and towards industries that initially have lower shares. This ebb and flow of comparative advantage helps to explain why Canadian manufacturing regions have not become more specialized in an environment of increasing integration into the world market.
    Keywords: International trade, Manufacturing, Business performance and ownership, Business adaptation and adjustment, Regional and urban profiles
    Date: 2007–05–14
  6. By: Fay Dunkerley (CES – KU Leuven, Belgium); André de Palma (THEMA, Univ de Cergy Pontoise, France & ENPC); Stef Proost (CES – KU Leuven, Belgium, CORE, Belgium)
    Abstract: We study the problem of a city with access to two firms or subcentres (restaurants, airports) selling a differentiated product and/or offering a differentiated workplace. The first subcentre is easily congested (near city centre, access by road), the second less prone to congestion but further away. Both need to attract customers and employees and need to make profits to cover their fixed costs. This is an asymmetric duopoly game that can be solved for a Nash equilibrium in prices and wages. This solution involves excessive congestion for the nearby subcentre. Three stylised policies are studied to address this congestion. The first policy is to widen the congested road to the nearby subcentre. The second policy option is to add congestion pricing (or parking pricing etc.) for the congested subcentre. The third policy is to provide a direct subsidy to the remote subcentre so that it can reduce its price. We illustrate the theory using a numerical model applied to the two Brussels airports.
    Keywords: duopoly, imperfect competition, congestion, general equilibrium, airport competition
    JEL: L13 D43 R41 R13
    Date: 2007
  7. By: Nicolaas Groenewold (UWA Business School, The University of Western Australia); Alfred Hagger (School of Economics, The University of Tasmania)
    Abstract: This paper analyses the efficacy of regional and federal government policies in reducing inter-regional unemployment disparities. We use as our framework a two-region general equilibrium model with a given freely-mobile supply of labour. We assume interregional migration to occur in response to inter-regional utility differentials. Each region has households, firms and a regional government. In addition to regional governments, there is a federal government. The firms in a region use a single factor, labour, to produce a single good which we assume to be different to that produced in the other region. It is supplied to households and to the regional government in the form of payroll taxes. Households consume some, trade some with households in the other region and give some up to the federal government as income tax. Firms and households bargain over wages and firms then choose employment to maximise profits. The resulting equilibrium will generally not be a full-employment one. We simulate a linearised numerical version of the model. We examine seven alternative policies, six carried out by a regional government and one by the federal government. In the first group there are traditional tax/expenditure polices as well as policies which might be seen as attacking the natural rate of unemployment: changes in unemployment benefits, changes in union power, changes in the labour force and changes in labour productivity. The federal government policy is a regionally- differentiated fiscal policy. Contrary to expectations, many policies which have traditionally been recommended to alleviate unemployment, are found, in fact, to exacerbate the unemployment problem.
    Date: 2007
  8. By: Richard Arnott (Boston College); John Rowse (University of Calgary)
    Abstract: This paper develops and calibrates a model of downtown parking in a city without mass transit, and applies it to investigate downtown parking policy. There is curbside and garage parking and traffic congestion. Spatial competition between private parking garages determines the equilibrium garage parking fee and spacing between parking garages. Curbside parking is priced below its social opportunity cost. Cruising for parking adjusts to equalize the full prices of on- and off-street parking, and contributes to traffic congestion. The central result is that raising curbside parking fees appears to be a very attractive policy since it generates efficiency gains that may be several times as large as the increased revenues raised.
    Keywords: parking, traffic congestion, parking garages, parking policy
    JEL: R40
    Date: 2007–04–30
  9. By: Okada, Aya; Siddharthan, N.S.
    Abstract: This study analyzes the patterns of agglomeration of some modern manufacturing sectors in India, and in particular the Indian automobile sector. It also examines and contrasts the factors that have led to different patterns of cluster development in two leading auto clusters in India-Chennai and the National Capital Region (NCR). Moreover, the study analyzes whether firms in clusters perform better than those that are excluded and whether the relative importance of variables that determine the behavior of firms differs among clusters. Our analyses, which employ a combination of quantitative and qualitative methods, show that Indian industrial clusters are largely concentrated in the three clustered regions: NCR, Mumbai-Pune, and Chennai-Bangalore, across different manufacturing sectors. Our study of the auto clusters in Chennai and the NCR find considerable differences in the patterns of cluster formation, due partly to the historical and policy conditions under which firms, particularly, the lead firms must operate. Moreover, our econometric analyses confirmed that being part of a cluster positively influences the performance of the auto component firms and those belonging to a cluster perform better.
    Keywords: Industrial clusters, Automobile industry, Spatial distribution of industry, India, Industrial estates
    JEL: L62 O14 R12
    Date: 2007–04
  10. By: Coutts, K.; Glyn, A.; Rowthorn, B.
    Abstract: The paper examines specific features of structural change in the UK since 1997, contrasting the decline in industrial jobs with the rise in a variety of service jobs. It examines the proximate causes of structural change, in particular whether the chronically slow growth of manufacturing output in the 1980s has persisted. The implications of this structural change are considered, particularly the effects on the balance of payments and regional employment patterns. The paper suggests that the main impact of government policies on regional employment may have been through the direct and multiplier effects of public expenditure.
    Keywords: structural change; deindustrialisation; balance of payments; regional employment; New Labour economic policies.
    JEL: E6 E65 F32 J6 R10
    Date: 2007–05
  11. By: Kuchiki, Akifumi
    Abstract: This paper proposes a general model of the flowchart approach to industrial cluster policy and applies this model to Guangzhou's automobile industry cluster. The flowchart approach to industrial cluster policy is an action plan for prioritizing policy measures in a time-ordered series. We reached the following two conclusions. First,we clarified the effects of Honda, Nissan, and Toyota on agglomeration in Guangzhou's automobile industry cluster. Second, we established that local governments play a crucial role in successful industrial cluster policy, and that the mayor of the local government should be offered incentives in order to target industrial clustering and implement cluster policy.
    Keywords: Prioritization of cluster policy, Linearization of policy measures, Flowchart model, Inductive method, Anchor firm, Capacity, China, Industrial estates, Industrial policy, Automobile industry
    JEL: G18 O18 R11
    Date: 2007–04
  12. By: Marco Bee; Roberto Benedetti; Giuseppe Espa
    Abstract: The problem of computing risk measures associated to flood events is extremely important not only from the point of view of civil protection systems but also because of the necessity for the municipalities of insuring against the damages. In this work we propose, in the framework of an integrated strategy, an operating solution which merges in a conditional approach the information usually available in this setup. First we use a Logistic Auto-Logistic (LAM) model for the estimation of the univariate conditional probabilities of flood events. This approach has two fundamental advantages: it allows to incorporate auxiliary information and does not require the target variables to be indepen- dent. Then we simulate the joint distribution of floodings by means of the Gibbs Sampler. Finally we propose an algorithm to increase ex post the spatial autocorrelation of the simulated events. The methodology is shown to be effective by means of an application to the estimation of the flood probability of Italian hydrographic regions.
    Keywords: Flood Risk, Conditional Approach, LAM Model, Pseudo-Maximum Likelihood Estimation, Spatial Autocorrelation, Gibbs Sampler.
    Date: 2007
  13. By: Jon H. Fiva (Statistics Norway)
    Abstract: This paper studies how changes in welfare benefit levels affect welfare recipients’ residential choices. Although several empirical studies have stressed that welfare policy may affect residential choices of welfare recipients, few studies have simultaneously taken into account that residential choices of welfare recipients also affect welfare policy. The main contribution of this paper is to address this policy endogeneity by utilizing a policy reform as a natural experiment. The results show that welfare policy exerts a nontrivial effect on residential choices of welfare recipients. Moreover, I show that ignoring the policy endogeneity may give rise to a downward bias in the estimated migration responses.
    Keywords: Welfare Benefits; Migration; Policy Endogeneity
    JEL: I38 H73 H77 R23
    Date: 2007–05
  14. By: William Kerr; Edward Glaeser; Glenn Ellison
    Abstract: Many industries are geographically concentrated. Many mechanisms that could account for such agglomeration have been proposed. We note that these theories make different predictions about which pairs of industries should be coagglomerated. We discuss the measurement of coagglomeration and use data from the Census Bureau’s Longitudinal Research Database from 1972 to 1997 to compute pairwise coagglomeration measurements for U.S. manufacturing industries. Industry attributes are used to construct measures of the relevance of each of Marshall’s three theories of industry agglomeration to each industry pair: (1) agglomeration saves transport costs by proximity to input suppliers or final consumers, (2) agglomeration allows for labor market pooling, and (3) agglomeration facilitates intellectual spillovers. We assess the importance of the theories via regressions of coagglomeration indices on these measures. Data on characteristics of corresponding industries in the United Kingdom are used as instruments. We find evidence to support each mechanism. Our results suggest that input-output dependencies are the most important factor, followed by labor pooling.
    Date: 2007–04
  15. By: Rodrigo R. Soares (University of Maryland, Catholic University of Rio de Janeiro, NBER and IZA)
    Abstract: This paper describes the pattern of reductions in mortality across Brazilian municipalities between 1970 and 2000, and analyzes its causes and consequences. It shows that, as in the international context, the relationship between income and life expectancy has shifted consistently in the recent past. But reductions in mortality within Brazil have been more homogeneously distributed than across countries. We use a compensating differentials approach to estimate the value of the observed reductions in mortality. The results suggest that gains in life expectancy had a welfare value equivalent to 39% of the growth in income per capita, being therefore responsible for 28% of the overall improvement in welfare. We then use a dynamic panel to conduct a preliminary assessment of the potential determinants of these gains. We show that improvements in education, access to water, and sanitation seem to be important determinants of the dimension of changes in life expectancy not correlated with income.
    Keywords: mortality, life expectancy, value of life, inequality, health
    JEL: I12 I31 I38 J17 O15 O54
    Date: 2007–05

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