nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒01‒12
eighteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Neighborhood Effects, Urban Public Policies and Housing Values. A Spatial Econometric Perspective By BAUMONT, Catherine
  2. Deforestation, Growth and Agglomeration Effects: Evidence from Agriculture in the Brazilian Amazon By Danilo Igliori
  3. Wages, Rents and Heterogeneous Moving Costs By Douglas J. Krupka; Kwame Donaldson
  4. Economic growth across space and time: subprovincial evidence from Mainland China By Curran, Declan; Funke, Michael; Wang, Jue
  5. City Air or City Markets: Productivity Gains in Urban Areas By Douglas J. Krupka
  6. Do Regional Price Levels Converge? : Paneleconometric Evidence Based on German Districts By Christian Dreger; Reinhold Kosfeld
  7. Agglomeration of Economic Activities in China: Evidence from Establishment Censuses By Lu, Jiangyong
  8. Trends and Determinants of China’s Industrial Agglomeration By Lu, Jiangyong; Tao, Zhigang
  9. FDI and the Relevance of Spatial Linkages: do third country effects matter for Dutch FDI? By Harry Garretsen; Jolanda Peeters
  10. On Pitchforks and Tomahawks By Michael Pflüger; Jens Südekum
  11. The territorial dimension of the Common Agricultural and Rural Development policy (CAP) and its relation to cohesion objectives By Dax, Thomas; Hovorka, Gerhard
  12. Are Immigrants More Mobile Than Natives? Evidence from Germany By Matthias Schündeln
  13. On Measuring the Complexity of Urban Living By Hasan, Lubna Hasan
  14. Bank consolidation and lending policies to small business: Differences across geographical areas By Enrico Beretta; Silvia Del Prete
  15. Entrance, Exit and Exclusion: Labour Market Flows of Foreign Born Adults in Swedish "Divided Cities" By Hedberg, Charlotta
  16. And the House Goes to - Ethnic Discrimination in the Greek Rental Market By Nick Drydakis
  17. Who Gentrifies Low-income Neighborhoods? By McKinnish, Terra; Walsh, Randall; White, T. Kirk
  18. The Persistence of Self-Employment Across Borders: New Evidence on Legal Immigrants to the United States By Randall K. Q. Akee; David A. Jaeger; Konstantinos Tatsiramos

  1. By: BAUMONT, Catherine (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Abstract: Problems of spatial segregation are often associated with segmented housing submarkets where the social status and social capital of a neighborhood appear to be the main driving forces behind housing price formation. Urban regeneration policies aim to raise housing values in poor areas through the construction of new buildings with higher levels of housing services. Structural attributes, neighborhood characteristics, and accessibility variables are the determinants of housing values considered in hedonic models. In this paper, it is assumed that spatial effects in terms of spatial autocorrelation, spatial heterogeneity, and spatial externalities are additional variables worth considering for at least two reasons: (i) in econometrics, OLS estimation problems arise from the occurrence of spatial dependencies among housing values; (ii) in urban policy studies, spatial effects engender a global diffusion process extending beyond housing submarkets. The impact of social housing policies and urban regeneration policies may permeate outside the areas where they are implemented. Our case study is of the urban area of Dijon (France), where two types of urban policy have been implemented in the last three decades: social housing projects in some suburban areas, and a regeneration plan for the old inner-city. Spatial effects are introduced in the hedonic model and a spatial error model is estimated, revealing a positive and significant global spatial effect combined with the usual influence of accessibility to the CBD. We also show the negative influence of location in social housing districts and the spatial diffusion effect they exert on neighboring districts.
    Keywords: Deprived districts, hedonic model, housing price, neighborhood effects, spatial econometrics, urban policies
    JEL: C12 C52 R14 R21
    Date: 2007–12
  2. By: Danilo Igliori (Department of Land Economy, University of Cambridge, UK)
    Abstract: The role of population growth and migration has been emphasized as a key variable to explain deforestation and land conversion in developing countries. The spatial distribution of human population and economic activities is remarkably uneven. At any geographical scale we find that different forms of agglomerations are pervasive. On the one hand, in central countries or regions, agglomeration is reflected in ‘large varieties of cities. On the other, less developed regions faces a dynamic process where new agglomerations form and develop as a result of frontier expansion. The recent literature on spatial economics has emphasized the role of agglomeration and clustering of economic activities as fundamental causes of an enhanced level of local economic performance, creating externalities that cause firms to grow faster and larger than they otherwise would do. However, very little has been done to examine the presence of agglomeration economies on economic performance of agricultural activities. In this paper we empirically examine whether an initial level of agglomeration impacts the subsequent economic growth and deforestation rates in the Brazilian Amazon. The regression estimates indicate that there is a significant non-linear association between the initial intensity of agglomeration with both growth and land conversion in subsequent periods.
    Keywords: Deforestation, Agglomeration, Growth, Brazilian Amazon, Land-use change, development, conservation, spatial econometrics
    JEL: Q2 Q4 R4
    Date: 2008
  3. By: Douglas J. Krupka (IZA); Kwame Donaldson (Georgia State University)
    Abstract: The model of compensating differentials in regional labor markets was developed by Roback (1982). The model interprets regional differences in constant quality wages and rents as compensating firms and residents for inter-regional differences in amenities. The model assumes that the costs of relocating to a new city are zero. The results hold in the presence of moving costs for the marginal migrant. This paper extends the Roback model to allow for moving costs which vary among a city’s residents and businesses. This modification of the model generates new interpretations of regional differences in rents and (to a lesser extent) wages. The importance of amenities is retained, but housing supply becomes the main other determinant of regional rents. Housing supply was for the most part ignored in the literature following on Roback’s initial insight. The new perspective also provides a bridge between the neo-classical perspective implicit in Roback’s approach and the newer literature on agglomeration economies.
    Keywords: compensating differentials, quality of life, housing supply, amenities, capitalization
    JEL: R12 R13 R23 R31 J31
    Date: 2007–12
  4. By: Curran, Declan (BOFIT); Funke, Michael (BOFIT); Wang, Jue (BOFIT)
    Abstract: This paper considers the persistent differences in economic performance across Chinese regions. We introduce a new county- and city-level dataset that spans all of mainland China and provides a detailed view of Chinese regional growth over the period 1997-2005. Non-parametric kernel density estimation is employed to establish the cross-sectional GDP per capita distribution, and the distributional dynamics are investigated using the probability matrix technique and associated stochastic kernel estimator. A set of explanatory variables is then introduced, and several regressions are run to test for conditional ƒÒ-convergence and to pinpoint influential factors for economic growth across counties and cities.
    Keywords: regional economic growth; China
    JEL: O11 R11
    Date: 2008–01–04
  5. By: Douglas J. Krupka (IZA)
    Abstract: Persistent productivity gains to rural-urban migrants have been documented by a number of researchers. One interpretation of this result is that individuals learn higher value skills in cities than they would have learned in less dense areas. Another explanation for this result, however, is that thicker urban labor markets allow for better matches, which are realized slowly through a process of subsequent job searches. Surprisingly, there has been no empirical test of these two interpretations to this date. This paper uses NLSY79 geocode data to assess whether wage growth of urban workers is due primarily to time spent in the urban environment (and thus learning), or job changes. The evidence suggests that both these processes are probably at work.
    Keywords: productivity, agglomeration economies, urban wage premium, matching, learning
    JEL: R11 R23 J24 J31 J61
    Date: 2007–12
  6. By: Christian Dreger; Reinhold Kosfeld
    Abstract: We investigate price index convergence on the base of regional data for 439 German districts. Prices refer to the overall consumer price index as well as to the index without housing prices. To increase the efficiency of the testing framework, a panel unit root analysis is performed, where cross section dependencies are taken into account. The tests indicate a lack of regional price convergence. While the idiosyncratic component of price differentials is mostly stationary, their common component is driven by a unit root. The results are very similar for the overall price index and the index without housing prices, and for the Western and Eastern part of the German economy. Obviously the elimination of housing prices is not sufficient to obtain a price index where tradable products dominate. One rationale of our findings is the persistent west-east divide in consumer prices. A second argument is related to the persistence of the price gradient between urban and rural regions.
    Keywords: Regional price differentials, price convergence, panel unit roots
    JEL: E31 R10 C33
    Date: 2007
  7. By: Lu, Jiangyong
    Abstract: In this paper, we document spatial distribution of economic activities in China based on two recent nationwide censuses of establishments. This paper provides the whole picture of agglomeration of economic activities in China for the first time in the literature. The robust increasing trend of agglomeration supports the argument that interregional trade barriers in China decreased during the period of 1996-2001. We extend the agglomeration literature by studying agglomeration patterns of establishments with various ownership types. We find that non-public owned establishments are more spatially concentrated compared with public owned establishments. We also examine determinants of agglomeration economies with multivariate regressions. Results show that micro-foundations of agglomeration work well in explaining agglomeration of non-public owned establishments, but not for public owned establishments in China.
    Keywords: Geographic Concentration; Micro-foundations; Ownership
    JEL: R10
    Date: 2008–01–06
  8. By: Lu, Jiangyong; Tao, Zhigang
    Abstract: This paper investigates trends and determinants of the spatial concentration of China’s manufacturing industries using a large firm-level data for the time period of 1998 to 2005. It is found that the overall industrial agglomeration in China has increased steadily in recent years though it is still much lower than those of the well-developed market economies (such as United States, United Kingdom, and France). It is also found that local protectionism among China’s various regions obstructs China’s industrial agglomeration while Marshallian externalities facilitate the process of spatial concentration of manufacturing industries. On an optimistic note, there is evidence that the negative impacts of local protectionism have become less significant over time but those of Marshallian externalities are gaining in importance, which is consistent with the overall trend of China’s industrial agglomeration.
    JEL: R1
    Date: 2007–11
  9. By: Harry Garretsen; Jolanda Peeters
    Abstract: The aim of this paper is to test for the relevance of spatial linkages for Dutch (outbound) FDI. To do so, and based on recent FDI theories, we estimate a spatial lag model to assess the importance of spatial linkages for Dutch FDI to 18 host countries. As a determinant of FDI, space or geography also enters our empirical analysis through the market size and a corporate income tax variable. Our paper is among the few to date to take spatial linkages with respect to FDI into account. The Dutch case is also interesting because Dutch firms account for alarge part of global FDI and related research has so far focused mainly on US FDI. After controlling for fixed effects, we find for our sample period 1984-2004 that third country effects matter, but the results are somewhat sensitive to sample and model selection. Apart from our benchmark spatial lag model, we discuss and estimate various alternative models notably by looking at European host FDI countries only, by dividing FDI into industry and services FDI and by estimating a spatial error model as well.
    Date: 2007–12
  10. By: Michael Pflüger (University of Passau, DIW Berlin and IZA); Jens Südekum (University of Duisburg-Essen and IZA)
    Abstract: The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide range of parameters we find that the model exhibits instead a smooth and easily reversible transition from symmetry to agglomeration.
    Keywords: core-periphery model, new economic geography, agglomeration, bifurcation pattern
    JEL: F12 F15 F22 R12 R50
    Date: 2007–12
  11. By: Dax, Thomas; Hovorka, Gerhard
    Abstract: An increasing focus on rural development issues has characterised the discussion of Common Agricultural Policy (CAP) reform. This reflects new societal demands for tasks and services provided by agriculture particularly in mountain and less-favoured areas (LFA). The regional distribution of CAP and Rural Development support underpins the argument that the territorial dimension implied by CAP reforms has not yet been taken sufficiently into account. The regional variation in the distribution of the LFA scheme between member states testifies this imbalance and underscores country specific priorities. LFAs will have to prove that they are more than a compensation measure, but already providing a range of multifunctional tasks.
    Keywords: territorial impact; rural development; less-favoured areas; LFA scheme; CAP reform
    JEL: Q01 R5
    Date: 2007–11–08
  12. By: Matthias Schündeln (Harvard University and IZA)
    Abstract: Low rates of internal migration in many European countries contribute to the persistence of significant regional labor market differences. To further our understanding of the underlying reasons I study internal migration in Germany, using the Mikrozensus, a very large sample of households living in Germany. The first contribution of this paper is to quantify the low mobility of the German population by estimating the unobserved cost of migration. I then focus on the differences between immigrants and natives, and start by presenting reducedform econometric evidence for the hypothesis that immigrants, once they are in the country of destination, are more mobile than natives. Observable, individual-level characteristics can only explain part of this finding. To estimate differences in the responsiveness to labor market characteristics that are due to unobserved characteristics, I then estimate conditional logit models of the migration decision across the German federal states. I find significantly higher responsiveness to labor market differentials in the immigrant population than in the native population. Unobserved moving costs for immigrants are estimated to be only about 37% of this same cost for natives. The findings bear on the assessment of the economic impact of immigration, and the paper contributes to the current immigration-related policy debates that feature prominently in many European countries, and that likely will continue to be important in light of the ongoing EU expansion and the expected resulting east-west migration.
    Keywords: internal migration, immigrants, cost of migration, regional convergence, Germany
    JEL: J61 R23
    Date: 2007–12
  13. By: Hasan, Lubna Hasan
    Abstract: This paper explores the concept of city ranking as a way to measure dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done, and their nature has changed considerably overtime. These rankings are also afflicted with many methodological and measurement problems. A review of major city rankings and related literature is carried out to suggest a framework for measuring Pakistani cities.
    Keywords: Quality of Life; Cities; Urbanization
    JEL: R1
    Date: 2007
  14. By: Enrico Beretta (Bank of Italy, Branch of Genoa, Research Office); Silvia Del Prete (Bank of Italy, Branch of Florence, Research Office)
    Abstract: Using Bank of Italy data on Italian banks in the period 1990-2004, the paper analyses the short and long-run effects of the concentration of the banking industry on the availability of credit to small and medium-sized firms. Our study employs a bank-based approach and investigates the differential effects of banking consolidation in the various geographical areas, in order to capture the influence of the different economic contexts. Our research also considers the different groups of intermediaries involved, as well as the role of “new entry” banks and of those not involved in consolidations (e.g. rivals). We find that banks’ specialization in terms of credit policy seems to be affected by M&As. On the one hand, the portion of credit allocated to small businesses decreases in the long run after mergers, which result in a more pronounced size change and a more complex organizational structure; this effect is stronger in the South and in the North East of Italy. On the other hand, in the case of acquisitions, banking groups improve their “expertise” in small business lending. These results hold in all the main geographical areas, except for the southern regions, where – everything being equal – small firms are riskier and banks’ takeovers are motivated mainly by the need to allow financial restructuring. However, in this market, the entry of new banks and close relationships between local banks and agglomerations of small firms partly offset the lower specialization on small business financing induced by acquisitions.
    Keywords: mergers and acquisitions, small business lending, regional analysis
    JEL: G21 G34 O18
    Date: 2007–11
  15. By: Hedberg, Charlotta (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: International migrants often achieve subordinate positions in the labour market or are left outside it. On the basis of unique, longitudinal data, this article investigates the socio-economic mobility of the foreign-born adult population in two Swedish cities, 1993–2002. Patterns of entrance, exit and exclusion from the labour market are compared between foreign- and native-born populations, focussing on variations between ‘distressed’ neighbourhoods and surrounding city regions. The results reveal that the foreign-born population experiences high labour turnover, generally with increasing employment stability, but that considerable vulnerability remains. However, surprisingly small differences were found between residents of ‘distressed’ and other neighbourhoods. Consequently, ethnic rather than residential status influenced the employment situation of foreign-born adults in Swedish cities.
    Keywords: Labour mobility; Segregation; Foreign Born; Life course; Sweden
    JEL: J15 J61 J63 R12
    Date: 2008–01–07
  16. By: Nick Drydakis (Department of Economics - University of Crete, Greece)
    Abstract: A field experiment was contacted in order to unbiased test whether female ethnic minorities; Albanians, face housing discrimination by owners when they seek to rent a unit in Greece three years after the national adoption of the European anti-discrimination legislation. Replicated the commonest process to rent a unit in Greece; telephone contact, we investigated a big sample represented by 122 areas. Rationally classified them in three status groups, according to their average rent levels, we found that discrimination increased monotonically with areas¢ status. The estimated probability of Albanians to receive an invitation to investigate a unit was lower by 0.231 in low status areas, followed by 0.324 in medium status areas, and by 0.419 in high status areas than that of Greeks. Adjusted for intra-class correlation the estimated differentials were found to be statistically significant. Similarly, we estimated an insignificant rent penalty against Albanians of 0.010 in low status areas, and significant penalties of 0.015 in medium status areas and of 0.023 in high status areas against Albanians. Consequently, a taste and/or statistical discrimination implied against Albanian seekers. Interestingly, the study enabled to estimate further that good rental housings are in significant degree unavailable to Albanians restricted their freedom in selecting a place to live. Specifically, Albanian seekers faced significantly less probabilities to investigate newer, busheled and units placed in floor than Greeks. Whilst, Albanians in order to have access to good units they had to pay more than Greeks. Finally, we estimated that female owners practiced significantly more availability constraints to Albanians than male owners. The current research contributes to two areas that have attracted scarce research attention in Greece: the experimental investigation of housing discrimination and discrimination by ethnicity. The results of this study have implications for understanding some of the enduring patterns of ethnic discrimination in the housing market.
    Keywords: Field Experiment, Ethnic Discrimination, Housing Discrimination, Housing Demand
    JEL: C93 J70 J71 J16 R
    Date: 2007–11–22
  17. By: McKinnish, Terra; Walsh, Randall; White, T. Kirk
    Abstract: This paper uses confidential Census data, specifically the 1990 and 2000 Census Long-Form data, to study the demographic processes underlying the gentrification of low income urban neighborhoods during the 1990’s. In contrast to previous studies, the analysis is conducted at the more refined census-tract level with a narrower definition of gentrification and more narrowly defined comparison neighborhoods. The analysis is also richly disaggregated by demographic characteristic, uncovering differential patterns by race, education, age and family structure that would not have emerged in the more aggregate analysis in previous studies. The results provide little evidence of displacement of low-income non-white households in gentrifying neighborhoods. The bulk of the income gains in gentrifying neighborhoods are attributed to white college graduates and black high school graduates. It is the disproportionate in-migration of the former and the disproportionate retention and income gains of the latter that appear to be the main engines of gentrification.
    Keywords: gentrification; neighborhood change; migration
    JEL: J6 R0 R2
    Date: 2007–11
  18. By: Randall K. Q. Akee (IZA); David A. Jaeger (College of William and Mary, University of Bonn and IZA); Konstantinos Tatsiramos (IZA)
    Abstract: Using recently-available data from the New Immigrant Survey, we find that previous selfemployment experience in an immigrant’s country of origin is an important determinant of their self-employment status in the U.S., increasing the probability of being self-employed by about 7 percent. Our results improve on the previous literature by measuring home-country self-employment directly rather than relying on proxy measures. We find little evidence to suggest that home-country self-employment has a significant effect on U.S. wages in either paid employment or self employment.
    Keywords: self-employment, entrepreneurship, New Immigrant Survey
    JEL: J61 J21
    Date: 2007–12

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