nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒10‒13
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Direct and indirect effects of new businesses on regional employment - An empirical analysis By Michael Fritsch; Florian Noseleit; Yvonne Schindele
  2. Increasing Competitiveness through Strengthening Regional Industrial Clusters: Middle Tennessee Marketing Region By David A. Penn
  3. Trade and Location with Land as a Productive Factor By Pflüger, Michael P.; Tabuchi, Takatoshi
  4. The spatial selection of heterogeneous firms By Toshihiro Okubo; Pierre M. Picard; Jacques-François Thisse
  5. Reti di cooperazione e innovazione. Analisi e valutazione di una politica regionale europea a sostegno dell’innovazione By Margherita Russo; Federica Rossi
  6. Are houses overvalued in the Netherlands? By Henk Kranendonk; Johan Verbruggen
  7. Development and rural poverty in the Regions of the European Union (Sviluppo e povertà rurale nelle regioni dell'Unione Europea) By Paola Bertolini; Marco Montanari
  9. Social Capital and Urban Growth By Edward L. Glaeser; Charles Redlick
  10. The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study using Propensity Scores By Anupam Nanda; Stephen L. Ross
  11. The Construction of Neighbourhoods and its Relevance for the Measurement of Social and Ethnic Segregation: Evidence from Denmark By Damm, Anna Piil; Schultz-Nielsen, Marie Louise
  12. Regional Disparity Measured by Subjective Happiness By Chisako Yamane; Shoko Yamane; Yoshiro Tsutsui

  1. By: Michael Fritsch (Friedrich Schiller University Jena, School of Economics and Business Administration); Florian Noseleit (Friedrich Schiller University Jena, School of Economics and Business Administration); Yvonne Schindele (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: We analyze different types of effects that new businesses may have on regional employment. We introduce different measures for employment change by separating employment change in incumbent businesses and employment change in new businesses. There are pronounced differences between regions with regard to the different employment effects. The average indirect employment effects of new business formation on incumbent employment are positive and are considerably larger than the employment that is directly generated in the new businesses.
    Keywords: Entrepreneurship, new business formation, regional development, direct and indirect effects
    JEL: L26 M13 O1 O18 R11
    Date: 2008–10–01
  2. By: David A. Penn
    Abstract: The Complete Study: After reviewing the broader socioeconomic dynamics and workforce issues in the Middle Tennessee Marketing Region, this study, commissioned by Middle Tennessee Industrial Development Association in Nashville, identifies regional industrial clusters and provides a detailed assessment of target industry clusters to present a detailed roadmap for the competitive regional economic development initiatives.
    Date: 2008–09
  3. By: Pflüger, Michael P. (University of Passau); Tabuchi, Takatoshi (University of Tokyo)
    Abstract: This paper is motivated by the fact that, contrary to its importance in practice, the role of land for production has received no attention in the new trade theory and the new economic geography. We set up a simple monopolistic competition model and we show that, due to the factor proportions effect which emerges when land is used as a productive factor besides labor, a number of tenets of the new trade and geography literature no longer hold. We also show that in order to explain the stylized facts, notably that wages are higher in larger locations, land-use for production and housing has to be taken into account. Our analysis furthermore implies that market-size based agglomeration forces are too weak to overcome the very strong congestion force associated with competition for land, unless the consumers' desire of variety (as expressed by a low elasticity of substitution) is very strong. This suggests that further agglomeration forces have to be invoked to explain the agglomeration of economic activity observed in the real world.
    Keywords: trade and location, land for production, agglomeration, relative wage, home market effect
    JEL: F12 F22 R12
    Date: 2008–09
  4. By: Toshihiro Okubo (Research Institute for Economics and Business Administration, Kobe University); Pierre M. Picard (University of Manchester (United Kingdom) and CORE, Université catholique de Louvain (Belgium)); Jacques-François Thisse (CORE, Université catholique de Louvain (Belgium), PSE (France) and CEPR)
    Abstract: The aim of this paper is to study the spatial selection of firms once it is recognized that heterogeneous firms typically choose different locations in respond to market integration of regions having different sizes. Specifically, we show that decreasing trade costs leads to the gradual agglomeration of efficient firms in the large region because these firms are able to survive in a more competitive environment. In contrast, high-cost firms seek protection against competition from the efficient firms by establishing themselves in the small region. However, when the spatial separation of markets ceases to be a sufficient protection against competition from the low-cost firms, high-cost firms also choose to set up in the larger market where they have access to a bigger pool of consumers. This leads to the following prediction: the relationship between economic integration and interregional productivity differences first increases and then decreases with market integration.
    Keywords: firm heterogeneity; spatial selection; trade liberalization
    JEL: F12 H22 H87 R12
    Date: 2008–09
  5. By: Margherita Russo; Federica Rossi
    Abstract: Recent developments in innovation theory and policy have led policymakers to assign particular importance to supporting networks of cooperation among heterogeneous economic actors, especially in production systems composed of small and medium enterprises. Such innovative policies call for parallel innovations in policy analysis, monitoring and assessment. Our analysis of a policy experiment aimed at supporting innovation networks in the Italian region of Tuscany intends to address some issues connected with the design, monitoring and evaluation of such interventions. Combining tools from ethnographic research and social networks analysis, we explore the structural elements of the policy programme, its impact on the regional innovation system, and the success of individual networks in attaining their specific objectives. This innovative approach also allows us to derive suggestions for policymakers intending to implement similar programmes.
    Keywords: Innovation policy; local development policies; regional development policies; evaluation management
    JEL: D78 O31 O32 O38 R58
    Date: 2008–06
  6. By: Henk Kranendonk; Johan Verbruggen
    Abstract: The movement of the level of house prices in the Netherlands between 1980 and 2007 is explainable fairly well by fundamental supply and demand factors. Empirical research has shown that the overvaluation of approximately 10% that existed in 2003 shrunk to approximately 0% in 2007. This was not caused by downward correction of house prices, but by the circumstance that the increase of the actual house price between 2003 and 2007 lagged behind the increase of the long-term value of the house price. Therefore, this does not confirm the IMF’s recently published research results, indicating that approximately 30% of the house price increase between 1997 and 2007 cannot be explained by fundamental factors.
    Keywords: House prices; housing market
    JEL: E39 R21 R31
    Date: 2008–04
  7. By: Paola Bertolini; Marco Montanari
    Abstract: The paper represents a first tentative analysis of the phenomenon of rural poverty in in the European Union's regions. In the first part, the paper discusses the problem of defining rural areas and examines the indicators used for international comparisons, notably the OECD definition, which provides the most widely used classification of rurality. Afterwards, we propose a different typology of rural and non-rural areas, based on population density and the share of employment in agriculture. Three categories of regions ("Predominantly Urban", "Intermediate" and "Predominantly Rural") are identified and then compared with regard to the following socio-economic aspects: income, demography, education and labour market. The analysis includes the whole EU-27 territory at NUTS3 level and uses EUROSTAT data, supplemented in some cases by national data. The conclusions of the paper underline the relevance of the rural poverty phenomenon in Europe.
    Keywords: rural poverty; European Union; rurality
    JEL: R10 R11 R23
    Date: 2008–06
  8. By: CARMEN AINA; GIORGIA CASALONE; PAOLO GHINETTI (SEMEQ Department - Faculty of Economics - University of Eastern Piedmont)
    Abstract: This paper aims at analysing the educational outcomes of a cohort of youths living in an Italian province (Novara), which was interested by large migration phenomenon during the last decades and, therefore, it is particularly suited to study inter-regional mobility issues. In particular we aim at establishing if, once controlled for parental educational background, family origin affects human capital accumulation. We find that non native youths on average have a higher probability of early leaving educational system. If the 1st generation migrants are the less advantaged as for educational attainment, even 2nd generation migrants, that in principle should be completely integrated, perform worse than the native born. This evidence calls into question the integration of internal migrants, for whom education plays a crucial role, even in a period in which foreign immigration seems to be of major concern.
    Keywords: Internal migration; Education; Survival analysis; Unobserved heterogeneity.
    JEL: J24 R23
    Date: 2008–09
  9. By: Edward L. Glaeser; Charles Redlick
    Abstract: Social capital is often place-specific while schooling is portable, so the prospect of migration may reduce the returns to social capital and increase the returns to schooling. If social capital matters for urban success, it is possible that an area can get caught in a bad equilibrium where the prospect of out-migration reduces social capital investment and a lack of social capital investment makes out-migration more appealing. We present a simple model of that process and then test its implications. We find little evidence to suggest that social capital is correlated with either area growth or rates of out-migration. We do, however, find significant differences in the returns to human capital across space, and a significant pattern of skilled people disproportionately leaving declining areas. For people in declining areas, the prospect of out-migration may increase the returns to investment in human capital, but it does not seem to impact investment in social capital.
    JEL: D0 H0 I0 J0 R0
    Date: 2008–10
  10. By: Anupam Nanda (Deloite Services, Mumbai); Stephen L. Ross (University of Connecticut)
    Abstract: We examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation in house prices. The study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller.s property condition disclosure statement to the buyer. When we compare the results from parametric and semi-parametric event analyses, we find that the semi-parametric or the propensity score analysis generals moderately larger estimated effects of the law on housing prices.
    Keywords: Property Condition Disclosure, Housing Price Index, Propensity Score Matching, Event Study
    JEL: C14 K11 L85 R21
    Date: 2008–09
  11. By: Damm, Anna Piil (Aarhus School of Business); Schultz-Nielsen, Marie Louise (Rockwool Foundation Research Unit)
    Abstract: In this paper we propose a model for constructing neighbourhoods based on geo-referenced data and administrative data. The 431,233 inhabited hectare cells in Denmark are clustered into 9,404 small and 2,296 large neighbourhoods, inhabited on average in 2004 by 572 and 2,343 persons respectively. The priorities in the clustering process are to obtain neighbourhoods that are unaltered over time, delineated by physical barriers, compact, homogeneous in terms of type of housing and ownership, relatively small, homogeneous in terms of number of inhabitants, and comprised of a contiguous cluster of cells. To illustrate the importance of detailed neighbourhood information we compare social and ethnic segregation measured by Isolation and Dissimilation indices on the levels of municipalities and of small neighbourhoods. Our findings demonstrate substantial variation in the residential mix in neighbourhoods within a given municipality, and thus show the importance of having information on a more detailed geographical level than that of the municipality.
    Keywords: geo-referenced data, neighbourhoods, segregation
    JEL: I3 J61 R2
    Date: 2008–09
  12. By: Chisako Yamane (Department of Economics, Niigata Sangyo University); Shoko Yamane (Graduate School of Economics, Osaka University); Yoshiro Tsutsui (Graduate School of Economics, Osaka University)
    Abstract: In this paper we estimate the regional disparity of income and happiness between prefectures using the results of questionnaire survey conducted by 21st Century COE program of Osaka University from 2003 to 2006. We found the followings. 1) Three measures of disparity, multiple comparisons, regression over prefecture dummies, and Gini indexes, reveal that the disparity of happiness was smaller than that of income. 2) When a part of income that depends on the personal attiributes as well as attributes of respondents, such as gender and age are adujusted, most of the disparity of happiness between prefectures is dissolved. 3) Three measures indicate that the average income increased, wihile income disparity has widened from 2003 to 2006, and average happiness decreased, while disparity of happiness remained constant over this period.
    Keywords: income disparity, regional disparity, subjective happiness. economics of happiness, Japan
    JEL: R13 I32 D63
    Date: 2008–08

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