nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒05‒17
seven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Industrial Agglomeration and Industrial Policies: The Philippine Experience By Philippine Institute for Development Studies
  2. Dartboard Tests for the Location Quotient By Paulo Guimarães; Octávio Figueiredo; Douglas Woodward
  3. The Unequal Geographic Burden of Federal Taxation By David Y. Albouy
  4. Spatial Interdependencies of FDI Locations: A Lessening of the Tyranny of Distance? By Stephen G. Hall; Pavlos Petroulas
  5. Does the Housing Market React to New Information on School Quality? By Jon H. Fiva and Lars J. Kirkebøen
  6. Principio di corrispondenza fiscale, popolazione non residente e tributi locali By Simonetta Botarelli
  7. The welfare effects of freight travel time savings By massiani, jerome

  1. By: Philippine Institute for Development Studies
    Abstract: In the relatively new body of ideas dubbed “new economic geography” and “spatial economics,” we find insights on the potentials of industrial agglomeration for regional and national economic development. This paper looked into the evolution of industrial development in the country as a means of elucidating the centripetal and centrifugal forces leading to agglomeration of firms and investments. A micro perspective was provided with the case study extended into the prime region in the country, Greater Manila Area. It was found that industrial agglomeration in the country takes the form of special economic zones and industry clusters, indicating that the government is taking the route toward regional dispersal of industries and the clustering strategy to spur industrial dynamism and competitiveness and consequently, regional and national economic development.
    Keywords: industrial agglomeration, industry clustering, trade and industry policy, special economic zones
    Date: 2008
  2. By: Paulo Guimarães (University of South Carolina and CEMPRE); Octávio Figueiredo (Universidade do Porto and CEMPRE); Douglas Woodward (University of South Carolina)
    Abstract: In this paper we reinterpret the location quotient, the commonly employed measure of regional industrial agglomeration, as an estimator derived from Ellison and Glaeser’s (1997) dartboard framework. This approach provides a theoretical foundation on which to build statistical tests for the measure. With a simple application, we show that these tests provide valuable information about the accuracy of the location quotient. The tests are relatively easy to implement using regional employment and establishment data.
    Keywords: Dartboard Location Model, Location Quotient, Statistical Tests
    JEL: R10 R12 C12
    Date: 2008–04
  3. By: David Y. Albouy
    Abstract: In the United States, workers in cities offering above-average nominal wages – cities with high productivity, low quality-of-life, or inefficient housing sectors – pay 30 percent more in federal taxes than otherwise identical workers in cities offering below-average wages. According to simulation results, federal taxes lower long-run employment levels in high-wage areas by 15 percent and land and housing prices by 25 and 4 percent, leading to locational inefficiencies costing 0.28 percent of income, or $34 billion in 2005. Indexing taxes to local wage-levels eliminates these locational inefficiencies. Tax deductions index taxes partially to local cost-of-living and improve locational efficiency.
    JEL: H24 H5 H77 J61 R1
    Date: 2008–05
  4. By: Stephen G. Hall (Leicester University, NIESR and Bank of Greece); Pavlos Petroulas (Bank of Greece)
    Abstract: Recent theoretical approaches stress the importance of complex integration strategies of multinationals and the interdependence between locations. Up till now little has been done to incorporate the potential cross-country dependencies into the empirical analysis of the determinants and the structure of foreign direct investment. By utilizing a panel data set that consists of real FDI stocks for 476 country pairs for the years 1994-2004 and a distance weighted spatial matrix, we find significant third country effects. Interestingly, the bilateral variables seem to be in concordance with the notion of horizontally motivated FDI while the spatial third country effects seem to comply with the notion of vertical FDI and production fragmentation. While bilateral variables seem to dominate location decisions the results confirm the existence and importance of international interdependence.
    Keywords: Foreign Direct Investment, Spatial Econometrics, Panel Data
    JEL: F21 F23 C31 C33
    Date: 2008–03
  5. By: Jon H. Fiva and Lars J. Kirkebøen (Statistics Norway)
    Abstract: This paper analyzes housing market reactions to the release of previously unpublished information on school quality. Using the sharp discontinuity in the information environment allows us to study price changes within school catchment areas, thus controlling for neighborhood unobservables. We find a substantial housing market reaction to publication of school quality indicators, suggesting that households care about school quality, and may be willing to pay for better schools. The publication effect is robust to a number of sensitivity checks, but does not seem to be permanent as prices revert to prepublication levels after two to three months. We discuss this reversion in relation to the literature on behavioral finance and the concept of limited attention.
    Keywords: valuation of school quality; hedonic methods; price reversion
    JEL: I21 I28 R21 R23
    Date: 2008–05
  6. By: Simonetta Botarelli
    Abstract: According to the Decentralization Theorem, local governments are more efficient than centralized ones in providing local public services, since resident citizens’ needs differ from those of citizens from other places. Local governments may better meet residents’ needs than a central government can do. A crucial issue may arise from the presence of non-voting (that are “non-resident”) citizens amongst the local population, thus affecting the implementation of the equivalence principle (Olson, 1969). The manifold effects of the presence of NRP (non- resident population) may variously affect public budget management as well as private economy both of a municipality and of its resident population (RP). Since NRP has a serious impact on efficiency/efficacy of public expenditure for services, it would be also worth evaluating its capacity of funding local public expenditure in terms of both current and future taxation. In funding local bodies the central government may opt for charging residents with a heavier burden of taxation than NRP (i.e., by partly replacing transfers with a share in Irpef). On the other hand, NRP’s features together with a different composition of population across municipalities may induce governments to supply balancing transfers aimed to partly compensate differences between actual taxable incomes within the local environment. Incoming NRP flows may thus affect municipalities’ politics and some dynamics are likely to have critical impacts on equilibrium budgets, even if choices are often shaped by higher economic resources eventually available to municipalities themselves.
    Keywords: Taxation, State and Local Taxation, Local Government, Intergovernmental Relations, Geographic Labour mobility
    JEL: H2 H7 J6 R23
    Date: 2008–01
  7. By: massiani, jerome
    Abstract: In this article we investigate the welfare effect of freight travel time savings. The general setup of this article is to suppose that transport operators face a constraint on minimum travel time and to examine what is occurring when this minimum travel time is changed. We briefly examine the current assessment methods and propose a less restrictive approach, in which we analyse how different economic agents trade off between the duration and cost of the different operations that are used in production and transport activities. We analyse how the change in the minimum travel time affects the different economic agents and investigate how these changes should be valued in cost benefit analysis.
    Keywords: freight value of time; cost benefit analysis
    JEL: L91 R41
    Date: 2008

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