nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒05‒24
seven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Knowledge hubs and knowledge clusters: Designing a knowledge architecture for development. By Evers, Hans-Dieter
  2. Labour mobility, related variety and the performance of plants: A Swedish study By Ron Boschma; Rikard Eriksson; Urban Lindgren
  3. Your Place in Space: Classroom Experiment on Spatial Location Theory By Margo Bergman; G. Dirk Mateer; Michael Reksulak; Jonathan C. Rork; Rick K. Wilson; David Zirkle
  4. New empirical evidence on local financial development and growth By Andrea Vaona; Roberto Patuelli
  5. Does partisan alignment affect the electoral reward of intergovernmental transfers? By Albert Solé-Ollé; Pilar Sorribas-Navarro
  6. Is Segregation Robust? By Bøg, Martin
  7. Job Competition and the Wage Curve By Simonetta Longhi

  1. By: Evers, Hans-Dieter
    Abstract: With globalisation and knowledge-based production, firms may cooperate on a global scale, outsource parts of their administrative or productive units and negate location altogether. The extremely low transaction costs of data, information and knowledge seem to invalidate the theory of agglomeration and the spatial clustering of firms, going back to the classical work by Alfred Weber (1868-1958) and Alfred Marshall (1842-1924), who emphasized the microeconomic benefits of industrial collocation. This paper will argue against this view and show why the growth of knowledge societies will rather increase than decrease the relevance of location by creating knowledge clusters and knowledge hubs. A knowledge cluster is a local innovation system organized around universities, research institutions and firms which successfully drive innovations and create new industries. Knowledge hubs are localities with high internal and external networking and knowledge sharing capabilities. Both form a new knowledge architecture within an epistemic landscape of knowledge creation and dissemination, structured by knowledge gaps and areas of low knowledge intensity. The paper will focus on the internal dynamics of knowledge clusters and knowledge hubs and show why clustering takes place despite globalisation and the rapid growth of ICT. The basic argument that firms and their delivery chains attempt to reduce transport (transaction) costs by choosing the same location is still valid for most industrial economies, but knowledge hubs have different dynamics relating to externalities produced from knowledge sharing and research and development outputs. The paper draws on empirical data derived from ongoing research in the Lee Kong Chian School of Business, Singapore Management University and in the Center for Development Research (ZEF), University of Bonn, supported by the German Aeronautics and Space Agency (DLR).
    Keywords: knowledge; knowledge and development; industrial agglomeration; knowledge hub; cluster; space
    JEL: D21 D23 D8
    Date: 2008
  2. By: Ron Boschma; Rikard Eriksson; Urban Lindgren
    Abstract: This paper analyses the impact of skill portfolios and labour mobility on plant performance by means of a unique database that connects attributes of individuals to features of plants for the whole Swedish economy. We found that a portfolio of related competences at the plant level increases significantly productivity growth of plants, in contrast to plant portfolios consisting of either similar or unrelated competences. Based on the analysis of 101,093 job moves, we found that inflows of skills that are related to the existing knowledge base of the plant had a positive effect on plant performance, while the inflow of new employees with skills that are already present in the plant had a negative impact. Our analyses show that inflows of unrelated skills only contribute positively to plant performance when these are recruited in the same region. Labour mobility across regions only has a positive effect on productivity growth of plants when this concerns new employees with related skills.
    Keywords: labour mobility, related variety, skill portfolio, plant performance, geographical proximity
    JEL: R11 R12 O18
    Date: 2008–05
  3. By: Margo Bergman; G. Dirk Mateer; Michael Reksulak; Jonathan C. Rork; Rick K. Wilson; David Zirkle
    Abstract: The authors detail an urban economics experiment that is easily run in the classroom. The experiment has a flexible design that allows the instructor to explore how congestion, zoning, public transportation, and taxation levels determine the bid-rent function. Heterogeneous agents in the experiment compete for land use utilizing a simple auction mechanism. Using the data that is collected, a bid-rent function is derived, and the experimental treatment is altered over the course of three sessions to uncover core concepts in urban economics. Moreover, this provides a tangible experience that can be used to help undergraduates relate to urban issues such as the steep rent gradient found around many larger colleges and universities.
    JEL: A22 R1 C9
    Date: 2008–05
  4. By: Andrea Vaona (Facoltà di Economia, Università di Lugano, Svizzera; Kiel Institute for the World Economy, Kiel, Germany; University of Verona, Department of Economic Sciences, Verona, Italy); Roberto Patuelli (Facoltà di Economia, Università di Lugano, Svizzera)
    Abstract: In this paper, we show that the regional finance-growth nexus in Italy is robust to a series of innovations with respect to the existing literature on the topic. We use finer measures of economic and financial development, as well as instruments with a deeper economic content. We rely on state-of-the-art cross-sectional and panel estimation methods, and we offer a thorough investigation of the nonlinearities in the relation between finance and growth. Our results show that, while local financial development is a key factor for economic growth, in regions with inefficient courts more credit might translate into reduced growth due to opportunistic behaviour and the consequent misallocation of funds.
    Keywords: Finance, Growth, Regions, Italy, Cross-Section Analysis, Panel Data Analysis
    JEL: O18 O16 C31
    Date: 2008–05–13
  5. By: Albert Solé-Ollé (Universitat de Barcelona (UB); Institut d'Economia de Barcelona (IEB); CESifo); Pilar Sorribas-Navarro (Universitat Barcelona (UB); Institut d'Economia de Barcelona (IEB))
    Abstract: In this paper we test the hypothesis that intergovernmental grants allocated to co-partisans buy more political support than grants allocated to local governments controlled by opposition parties. We use a rich Spanish database containing information about the grants received by 617 municipalities during the period 1993-2003 from two different upper-tier governments (Regional and Upper-local), as well as data of municipal voting behaviour at three electoral contests held at the different layers of government during this period. Therefore, we are able to estimate two different vote equations, analysing the effects of grants given to aligned and unaligned municipalities on the vote share of the incumbent party/parties at the regional and local elections. We account for the endogeneity of grants by instrumenting them with the average amount of grants distributed by upper-layer governments. The results suggest that grants given to co-partisans buy some political support, but that grants given to opposition parties do not bring any votes, suggesting that the grantee reaps as much political credit from intergovernmental grants as the grantor
    Keywords: Voting, parties, grants.
    JEL: C72 D72
    Date: 2008
  6. By: Bøg, Martin
    Abstract: This paper studies the question of how well we understand segregation. The point of departure is Schelling’s spatial proximity model in one dimension. By introducing noise I show that segregation emerges as the long run prediction of neighborhood evolution, both when residents have Schelling-type threshold preferences and strict preferences for diversity. Analytical result are complemented with numerical simulations which show that within a reasonable time frame full segregation does not occur. When residents have a preference for diversity, I show that a natural perturbation away from the diversity monomorphism dramatically alters the long run prediction: integration is the unique long run prediction, even in the absence of noise.
    Keywords: segregation; Markov Process; Stochastic Stability; simulations
    JEL: D62 C73 C72
    Date: 2007–01–25
  7. By: Simonetta Longhi (Institute for Social and Economic Research)
    Abstract: The wage curve literature suggests a negative relationship between regional unemployment rates and regional wages; the most widely accepted explanations are efficiency wage and labour turnover costs theories in which the unemployment rate is a measure of job competition. Since it fails to correctly measure labour supply and demand, however, the unemployment rate is likely to be a biased measure of job competition. This paper analyses the robustness of the wage curve to different ways of measuring job competition using data for the UK over the period 1997-2005 and concludes that efficiency wage and labour turnover costs theories do not seem to offer satisfactory explanations of the wage curve phenomenon.
    Keywords: job search, unemployment, wages
    Date: 2007–10

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