nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒12‒07
fourteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Governmental activity, integration, and agglomeration By Ingrid Ott; Susanne Soretz
  2. Sunnier, Denser and More Productive Cities By John Hartwick; Michael Brolley
  3. A Simultaneous Spatial Panel Data Model of Regional Growth Variation: An Empirical Analysis of Employment, Income, Migration and Local Public Services By Gebremeskel H. Gebremariam; Tesfa G. Gebremedhin; Peter V. Schaeffer; Randall W. Jackson
  4. Modeling Regional Growth Spillovers: An Analysis of Employment Growth, Migration Behavior, Local Public Services and Household Income in Appalachia By Gebremeskel H. Gebremariam; Tesfa G. Gebremedhin; Peter V. Schaeffer; Randall W. Jackson
  5. Regional hierarchies and the location of hi-tech MNEs: the case of the pharmaceutical industry in the UK By Constantina Kottaridi
  6. Start-Ups and Employment Growth - Evidence from Sweden By Andersson, Martin; Noseleit, Florian
  7. Wage Differentiation and Unemployment in the Districts of the Czech Republic By Kamila Fialová
  8. Is There A Trade-off Between Regional Growth and National Income? Theory and Evidence from the EU By Young-Bae Kim
  9. Collaboration networks as carriers of knowledge spillovers: Evidence from EU27 regions By Jarno Hoekman; Koen Frenken; Frank van Oort
  10. Trade liberalization and economic geography in transition countries: Can FDI explain the adjustment patterns of regional wages? By Jože P. Damijan; Crt Kostevc
  11. School desegregation, school choice and changes in residential location patterns by race By Nathaniel Baum-Snow; Byron Lutz
  12. Pricing Urban Congestion By Parry, Ian W.H.
  13. Education and Mobility By Machin, Stephen; Pelkonen, Panu; Salvanes, Kjell G.
  14. Housing market risks in the United Kingdom By Robert F. Martin

  1. By: Ingrid Ott; Susanne Soretz
    Abstract: This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region's public input, e.g. the extent to which regional road networks are connected. Both integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced integration, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomeration, thereby increasing equilibrium concentration. Due to the congestion externalities, the market outcome ends up in suboptimally high concentration
    Keywords: public inputs; agglomeration; integration
    JEL: O33 Z13
    Date: 2008–11
  2. By: John Hartwick (Queen's University); Michael Brolley (Queen's University)
    Abstract: We set out an open, monocentric city with residential structures and reflect how changes to the amenity index affects the city. On the consumption side an amenity is represented by an exogenous boost to the utility of a resident's current commodity bundle. The cities population, land rent and footprint expand and its density rises. We test for an amenity effect in local wages with household data for the US in 1990 and discover the city density is much stronger in explaining local premia than is the city population. We test for amenity effects in local house prices with the same data set.
    Keywords: Climatic amenities, Density, Wages
    JEL: R14 J61
    Date: 2008–08
  3. By: Gebremeskel H. Gebremariam; Tesfa G. Gebremedhin; Peter V. Schaeffer; Randall W. Jackson
    Abstract: In this paper we develop a spatial panel simultaneous-equations model of employment growth, migration behavior, local public services and median household income in a partial lag-adjustment growth-equilibrium framework and utilizing a one-way error component model for the disturbances. To estimate the model, we developed a five-step new estimation strategy by generalizing the Generalized Spatial Three-Stage Least Squares (GS3SLS) approach outlined in Kelejian and Prucha (2004) into a panel data setting. The empirical implementation of the model uses county-level data from the 418 Appalachian counties for 1980-2000. The estimates show the existence of feedback simultaneities among the endogenous variables of the model, the existence of conditional convergence with respect to the respective endogenous variable of each equation of the model, and the existence of spatial autoregressive lag effects and spatial cross-regressive lag effects with respect to the endogenous variables of the model. Moreover, the speed of adjustment parameters is generally comparable to those in literature. One of the key conclusions is that sector-specific policies should be integrated and harmonized in order to give the desirable outcome. In addition, regionally focusing resources for development policy may yield greater returns than treating all locations the same.
    Keywords: Simultaneous spatial panel data model, Regional growth variation, Spatial autoregressive and cross-regressive lags, FGS3SLS
    Date: 2008
  4. By: Gebremeskel H. Gebremariam; Tesfa G. Gebremedhin; Peter V. Schaeffer; Randall W. Jackson
    Abstract: In this paper, a spatial simultaneous growth equilibrium model of employment growth, migration behavior, median household income and local public expenditures is developed. The model is empirically estimated by Generalized Spatial Three-Stage Least Squares estimator using count- level data from Appalachia for 1990-2000. The results suggest the existence of interdependence among the growth rates of employment, gross in- and out-migration, median household income and local public services in the form of feedback simultaneities, spatial autoregressive lag and spatial cross-regressive lag simultaneities. The findings also suggest the existence of conditional convergence with respect to endogenous variables of the model. The speed of adjustment for the growth rate of median household income is the fastest and for the growth rate of gross in- migration is the slowest. The findings also indicate the clustering of counties on the basis of their growth rates of median household incomes which would require the need for development policy coordination at the regional level, or the whole of Appalachia. Another key finding of the study is that Appalachian counties with higher initial population sizes were both destinations and sources of migrants during the study period.
    Keywords: Growth Spillovers, Spatial lag, GS3SLS, Employment, Income, and Migration
    Date: 2008
  5. By: Constantina Kottaridi
    Abstract: Globalization, far from eliminating the relevance of geography, brings to the surface the importance of location as a collector and repository of specialized knowledge. In this “new age of capitalism”, regions are emerging as important catalysts for innovation and production development. This paper investigates the location patterns of R&D-intensive MNEs at the geographical micro-level. Analysis refers to the pharmaceutical industry, as one of the most active industries in FDI in R&D, and their foreign activities established in British regions. In this route, the present study develops a hierarchy of UK regions both on a technological and skills basis but also on a broader basis covering the overall macroeconomic environment. Results point towards a combination of corporate location strategies. High-technology firms are more likely to operate abroad in technology specialised large regions in accordance with regional hierarchical ordering. This pattern is consistent with MNEs’ commitment to access and tap into the specific technological assets embedded in the local knowledge systems and at the same time exploit their corporate-specific advantages in large markets.
    Keywords: regions, hierarchies, location, pharmaceuticals
    Date: 2008
  6. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Noseleit, Florian (Friedrich-Schiller-University Jena)
    Abstract: We use longitudinal data over a decade on start-ups and employment in Swedish regions and analyze the effect of start-ups on subsequent employment growth. We extend previous analyses by examining the influence of regional start-ups in a sector on regional employment growth in the same sector and on other sectors. We find differences between different types of start-ups. Knowledge-intensive start-ups seem to have larger effects on the regional economy. In particular, start-ups in high-end services have significant negative impacts on employment in other sectors but a positive long-run impact. This is consistent with the idea that start-ups are a vehicle for changes in the composition of regional industry. Moreover, our results illustrate that the known S-shaped pattern can be attributed to different effects that start-ups in a sector have on employment change in the same sector and in others.
    Keywords: Entrepreneurship; Employment Growth; Regional; Development; Start-ups
    JEL: J23 M13 O52
    Date: 2008–12–03
  7. By: Kamila Fialová (Komerční Banka, Prague; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This paper concerns the labour market differences among the 77 districts of the Czech Republic. There was a remarkable trend of increasing regional labour market differentiation in the 1990’s, however, the patterns of differentiation have stabilised since then. The first part of the paper aims to describe the regional differentiation in wages and unemployment on the descriptive method basis. The other part of the study attempts to explain the differences in wages by an econometric model. We focus on the effect of unemployment rate, representing an exogenous factor of the region itself. The model’s specification arises out of the general concept of wage differentiation and the concept of the wage curve. According to our analysis there were several factors of influence on the regional wage differentiation in 2001: educational structure of the population, employment structure of the regional economy, degree of economic concentration, and district rate of unemployment. The coefficient of the unemployment elasticity of wages equals –0.08, which can be considered as evidence of the existence of the wage curve in the districts of the Czech Republic. Moreover, the relationship is stronger in the low-unemployment districts.
    Keywords: regional disparities, wages, unemployment, wage curve
    JEL: E24 J31 J64 R23
    Date: 2008–11
  8. By: Young-Bae Kim (University of Surrey)
    Abstract: The paper theoretically and empirically investigates the effect of changes in national labourmarket conditions on regional growth from the point of view of local economies. The mechanism of efficiency wage is introduced to a growth model and it is argued that local regions belonging to richer countries would experience slower economic growth than those in poorer countries, ceteris paribus. The model emphasises the process of interregional wage dependence in which national average wage or income plays an important role in determining regional wages and growth. The empirical findings from EU regional data also suggest that national income is significantly and negatively associated with regional growth. The adverse effect of national income on regional growth is also observed to be stronger among richer regions whose income is above the national average.
    Keywords: Artificial Neural Networks; Forecasting; Inflation
    JEL: C51 C52 C53 E31 E37
    Date: 2008–11
  9. By: Jarno Hoekman (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Koen Frenken (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Frank van Oort (Netherlands Institute for Spatial Research (RPB)- The Netherlands)
    Abstract: The geography of innovation traditionally concentrates on localised knowledge spillovers, yet neglects collaboration networks as a means to access knowledge outside the region. Using publication and patent data for 1316 regions in the EU27 plus Norway and Switzerland, we find that both localised knowledge spillovers and the knowledge spillovers stemming from collaboration affect the innovative performance of regions. The results provide support for EU policies aimed at creating European collaboration networks.
    Keywords: Knowledge Production Function, Spillovers, Collaboration, Networks, European Research Area, Publication, Patent, Public Good
    JEL: C21 O30 O33 O52 R11
    Date: 2008–09
  10. By: Jože P. Damijan; Crt Kostevc
    Abstract: Present paper studies the within-country regional effects of trade liberalization in transition countries. We argue that FDI inflows can be an important factor to accelerate the regional adjustment process in the home country. In order to underspin this theoretically, we first augment the new economic geography models by breaking the implied regional symmetry and by introducing capital as a second factor of production. Major contribution of our approach is that it allows for inter-regional as well as international capital mobility while labor is assumed to be immobile. Numerical simulations of our model indicate that this should contribute to faster convergence of relative regional wages in the smaller region. In addition, we examine the exact adjustment pattern of relative regional wages in five transition countries in the period 1990-2004 after they have liberalized their trade with the EU. First, we show that in four out of five transition countries there is a significant u-shaped adjustment pattern of regional wages after they opened up to foreign trade. And second, we find robust econometric confirmation that in three of the five countries FDI has contributed significantly to faster adjustment of relative regional wages.
    Keywords: economic geography, trade costs, wages, transition countries, foreign direct investment
    JEL: F16 P23 R13
    Date: 2008
  11. By: Nathaniel Baum-Snow; Byron Lutz
    Abstract: This paper examines the residential location and school choice responses to desegregation of large public school districts. Unique data and variation in the timing of desegregation orders facilitate the analysis. The 16 percent decline in white public enrollment due to desegregation primarily led to migration to suburban districts in the South and increased private enrollment in other regions. Desegregation caused black public enrollment to increase by 20 percent outside the South largely due to population changes. The spatial distributions of responses by race to desegregation orders closely match those predicted by a model of residential location and private school choice.
    Date: 2008
  12. By: Parry, Ian W.H. (Resources for the Future)
    Abstract: This paper reviews literature on the optimal design of pricing policies to reduce urban automobile congestion. The implications of a range of complicating factors are considered, such as traffic bottlenecks, constraints on which roads and freeway lanes in the road network can be priced, driver heterogeneity, private toll operators, other externalities besides congestion, and interactions between congestion taxes and the broader fiscal system. We also briefly discuss the incidence of congestion taxes and experience with this policy in the United States and elsewhere. Although the economics literature on congestion pricing has advanced considerably over the last 20 years, research is still needed on the empirical measurement of second-best efficient tolls for urban centers and whether alternative design features have substantial implications for efficiency. More research is also needed on the design of schemes to promote feasibility by compensating adversely affected groups with minimal loss in economic efficiency.
    Keywords: traffic congestion, externality, peak-period fee, congestion toll incidence
    JEL: R41 R48 H21
    Date: 2008–11–24
  13. By: Machin, Stephen (University College London); Pelkonen, Panu (London School of Economics); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration)
    Abstract: We show that the length of compulsory education has a causal impact on regional labour mobility. The analysis is based on a quasi-exogenous staged Norwegian school reform, and register data on the whole population. Based on the results, we conclude that part of the US-Europe difference, as well as the European North-South difference in labour mobility, is likely to be due to differences in levels of education in the respective regions.
    Keywords: labour market, mobility, education
    JEL: I28 J24 J61
    Date: 2008–11
  14. By: Robert F. Martin
    Abstract: House prices in the United Kingdom rose rapidly in recent years. The run-up, larger than any other in U.K. history, leveled off early last year. House prices are currently declining at rates faster than those seen in the early 1990's downturn. The housing downturn, however, is far from complete. Using the price-rent ratio as a guide, house prices are likely to fall at least a further 30 percent before leveling off. Given the historic links between housing and real activity, the downturn is likely to be associated with very slow growth. Going forward, we recommend the price-rent ratio as the appropriate measure of housing valuation.
    Date: 2008

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