nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒12‒19
six papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Regional imbalances and market potential in Brazil By Pedro Vasconcelos Amaral; Mauro Borges Lemos; Rodrigo Ferreira Simões; Flávia Chein Feres
  2. Do Agglomeration Economies Reduce the Sensitivity of Firm Location to Tax Differentials? By Brülhart, Marius; Jametti, Mario; Schmidheiny, Kurt
  4. Financial Structure, Liquidity, and Firm Locations By Andres Almazan; Adolfo de Motta; Sheridan Titman; Vahap Uysal
  5. Noise Charges in Road Traffic: A Pricing Schedule Based on the Marginal Cost Principle By Andersson, Henrik; Ögren, Mikael
  6. Affordability and subsidies in public urban transport : what do we mean, what can be done? By Serebrisky,Tomas; Munoz-Raskin, Ramon; Gomez-Lobo, Andres; Estupinan, Nicolas

  1. By: Pedro Vasconcelos Amaral (Cedeplar-UFMG); Mauro Borges Lemos (Cedeplar-UFMG); Rodrigo Ferreira Simões (Cedeplar-UFMG); Flávia Chein Feres (Cedeplar-UFMG)
    Abstract: Brazil presented in the last 30 years not only periods of economic growth but also crises and stagnation. The Brazilian regions’ performance (in face of the challenges and opportunities presented during this period) was not even at all, as we can see by the massive regional imbalances around the country. Various approaches have tried to understand this reality of economic activity spatial concentration. Among them, the emerging New Economic Geography (NEG). Could this theory comprehend and explain the regional unevenness on wages among Brazilian municipalities over the recent decades? Using 1980, 1991 and 2000 Brazilian Census data (at comparables municipalities areas), this paper aims to estimate the NEG wage equation, using panel data model with spatially correlated errors components. The results point to a strong relationship between market potential and wages, indicating that the NEG theoretical framework might be well fit to recent Brazilian municipalities’ reality.
    Keywords: New economic geography, market potential, Brazil
    JEL: F12 R12 C21
    Date: 2007–12
  2. By: Brülhart, Marius; Jametti, Mario; Schmidheiny, Kurt
    Abstract: Low corporate taxes can help attract new firms. This is the main mechanism underpinning the standard 'race-to-the-bottom' view of tax competition. A recent theoretical literature has qualified this view by formalizing the argument that agglomeration forces can reduce firms' sensitivity to tax differentials across locations. We test this proposition using data on firm startups across Swiss municipalities. We find that, on average, high corporate income taxes do deter new firms, but that this relationship is significantly weaker in the most spatially concentrated sectors. Location choices of firms in sectors with an agglomeration intensity at the twentieth percentile of the sample distribution are estimated to be twice as responsive to a given difference in local corporate tax burdens as firms in sectors with an agglomeration intensity at the eightieth percentile. Hence, our analysis confirms the theoretical prediction: agglomeration economies can neutralize the impact of tax differentials on firms' location choices.
    Keywords: agglomeration economies; count models; firm location; local taxation; Switzerland
    JEL: H32 R3
    Date: 2007–12
  3. By: Sergio Lodde
    Abstract: The paper examines the relationship between human capital and productivity growth with reference to the Italian regions. Two approaches can be distinguished. One belonging to the neoclassical tradition stresses the accumulation of human capital as a determinant of growth, while the other, inspired by Nelson and Phelps, emphasizes the role of the stock in developing endogenous technology and catching up with more advanced economies. These hypotheses have been tested at an aggregate level but results might be the overall outcome of different processes across sectors due to the different catching-up potential. In particular we expect the Nelson-Phelps hypothesis to be more relevant in the industrial sector where innovation is the most important growth determinant. A model is estimated which allows to test both the neoclassical and the Nelson-Phelps hypotheses breaking down the analysis by sector. The results do not confirm our expectations. In the industrial sector the neoclassical hypothesis is clearly rejected by the data. Some evidence supporting the Schumpeterian one can be detected when the technical component of human capital is taken into account but it is not robust to changes in the model specification. In the service sector the results are inconclusive as well. A positive and significant effect of human capital accumulation has been found for the whole sector but the explanatory power of this variable decreases considerably in the marketable services branch.
    Keywords: growth, human capital, regions, sectors
    JEL: J24 O40 R11
    Date: 2007
  4. By: Andres Almazan; Adolfo de Motta; Sheridan Titman; Vahap Uysal
    Abstract: This paper investigates the relation between a firm's location and its corporate finance decisions. We develop a simple model where being located within an industry cluster increases opportunities to make acquisitions, and to facilitate those acquisitions, firms within clusters maintain more financial slack. Consistent with our model we find that firms that are located within industry clusters tend to make more acquisitions, and have lower debt ratios and larger cash balances than their industry peers located outside clusters. In addition, we document that firms in growing cities and technology centers also maintain more financial slack. Overall, these findings, which reveal systematic patterns between geography and corporate finance choices, suggest the importance of growth opportunities in firms’ financial decisions.
    JEL: G30 G32 G34 R3
    Date: 2007–11
  5. By: Andersson, Henrik (VTI); Ögren, Mikael (VTI)
    Abstract: One way of mitigating the negative effects of noise from road traffic is to include the external cost of noise in a road charging system. This study shows how standardized calculation methods for road traffic noise can be used together with monetary estimates of the social cost of noise exposure to calculate charges based on the social marginal cost. Using Swedish data on traffic volume and individuals exposed to road noise, together with official Swedish monetary values for noise exposure, we estimate road-noise charges for light (cars) and heavy (trucks) vehicles.
    Keywords: Externalities; Marginal Cost; Noise; Road Traffic
    JEL: D62 Q51 R41
    Date: 2007–12–13
  6. By: Serebrisky,Tomas; Munoz-Raskin, Ramon; Gomez-Lobo, Andres; Estupinan, Nicolas
    Abstract: Subsidy policies on public urban transport have been adopted ubiquitously. In both developed and developing countries, subsidies are implemented to make transport more affordable. Despite their widespread implementation, there are virtually no quantitative assessments of their distributional incidence, making i t impossible to determine if these instruments are pro-poor. This paper reviews the arguments used to justify subsidy policies in public urban transport. Using different tools to quantitatively evaluate the incidence and distributive impacts of subsidy policy options, the paper analyzes the findings of a series of research papers that study urban public transport subsidy policies in developed and developing countries. The available evidence indicates that current public urban transport subsidy policies do not make the poorest better off. Supply-side subsidies are, for the most part, neutral or regressive; while demand-side subsidies perform better-although many of them do not improve income distribution. Considering that the policy objective is to improve the welfare of the poorest, it is imperative to move away from supply-side subsidies towards demand-side subsidies and to integrate transport social concerns into wider poverty alleviation efforts, which include the possibility of channeling subsidies through monetary transfer systems or through other transfer instruments (food subsidies, health services and education for the poor). The general conclusion of the paper is that more effort should be devoted to improve the targeting properties of public urban transport subsidies using means-testing procedures to ensure a more pro-poor incidence of subsidies.
    Keywords: Transport Economics Policy & Planning,Transport in Urban Areas,Urban Transport,Taxation & Subsidies,Economic Theory & Research
    Date: 2007–12–01

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