nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒02‒28
29 papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Russian Regional Convergence Process : Where Does It Go? By Konstantin A. Kholodilin; Aleksey Oshchepkov; Boriss Siliverstovs
  2. Agglomeration and Growth: Cross-Country Evidence By Brülhart, Marius; Sbergami, Federica
  3. Survival of the Fittest in Cities: Agglomeration, Selection, and Polarisation By Behrens, Kristian; Robert-Nicoud, Frédéric
  4. Regional dimensions of economic development in Iran: A new economic geography approach By Farmanesh, Amir
  5. The productivity advantages of large cities: Distinguishing agglomeration from firm selection By Pierre Philippe Combes; Gilles Duranton; Laurent Gobillon; Diego Puga; Sébastien Roux
  6. New Economic Geography: an appraisal on the occasion of Paul Krugman's 2008 Nobel Prize in Economics By Fujita, Masahisa; Thisse, Jacques-François
  7. Dots to Boxes: Do the Size and Shape of Spatial Units Jeopardize Economic Geography Estimations? By Briant, Anthony; Combes, Pierre-Philippe; Lafourcade, Miren
  8. The Rise and Fall of Spatial Inequalities in France: a Long-Run Perspective By Combes, Pierre-Philippe; Lafourcade, Miren; Thisse, Jacques-François; Toutain, Jean-Claude
  9. Reinventing the Skilled Region: Human Capital Externalities and Industrial Change By Daniel F. Heuermann
  10. Labour Pooling As a Source of Agglomeration: An Empirical Investigation By Overman, Henry G.; Puga, Diego
  11. Explaining the size distribution of cities: x-treme economies By Berliant, Marcus; Watanabe, Hiroki
  12. Urbanization and Structural Transformation By Michaels, Guy; Rauch, Ferdinand; Redding, Stephen J
  13. The Spatial Selection of Heterogeneous Firms By Okubo, Toshihiro; Picard, Pierre M; Thisse, Jacques-François
  14. Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany By Audretsch, David B; Dohse, Dirk; Niebuhr, Annekatrin
  15. The Internet and Local Wages: Convergence or Divergence? By Chris Forman; Avi Goldfarb; Shane Greenstein
  16. Towards a System of Open Cities in China: Home Prices, FDI Flows and Air Quality in 35 Major Cities By Siqi Zheng; Matthew E. Kahn; Hongyu Liu
  17. Explorative analysis of spatial patterns of influenza incidences in Sweden 1999—2008 By Schiöler, Linus
  18. Is the Grass Greener on the Other Side of the River?: The Choice of Where to Work and Where to Live for Movers By Ken Sanford; William Hoyt
  19. Economic Geography: a Review of the Theoretical and Empirical Literature By Redding, Stephen J
  20. Car Ownership and the Labour Market of Ethnic Minorities By Gautier, Pieter A; Zenou, Yves
  21. Cities with Suburbs: Evidence from India By Kala Seetharam Sridhar
  22. Tax Limits, Houses, and Schools: Seemingly Unrelated and Offsetting Effects By William Hoyt; Paul A. Coomes; Amelia M. Biehl
  23. The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets By Alan Manning
  24. Public Support to Clusters: A Firm Level Study of French “Local Productive Systems” By Martin, Philippe; Mayer, Thierry; Mayneris, Florian
  25. Market Size and Entrepreneurship By Yasuhiro Sato; Takatoshi Tabuchi; Kazuhiro Yamamoto
  26. Long-term care: Regional disparities in Belgium By Güngör Karakaya
  27. The Impact of U.S. Regional Business Cycles on Remittances to Latin America By Magnusson, Kristin
  28. Manipulable Congestion Tolls By Jan K. Brueckner; Erik T. Verhoef
  29. Das Cluster-Modell bei sektoral unterschiedlichen Transportkosten By Sascha Frohwerk

  1. By: Konstantin A. Kholodilin; Aleksey Oshchepkov; Boriss Siliverstovs
    Abstract: This paper investigates the income convergence among Russian regions in the period 1998-2006. It makes two major contributions to rather extensive literature on the regional convergence in Russia. First, it identifies spatial regimes using the exploratory spatial data analysis. Second, it examines the impact of spatial effects on the convergence process. Our results show that the overall speed of regional convergence in Russia, being low by international standards, becomes even lower after controlling for spatial effects. However, when accounting for the spatial regimes, we find a strong regional convergence among high-income regions located near other high-income regions. Our results indicate that estimation of speed of convergence using aggregate data may result in misleading conclusions regarding the nature of convergence process among Russia's regions.
    Keywords: Regional convergence; d-convergence; ß-convergence; spatial regimes; spatial effects
    JEL: C21 O47 R12
    Date: 2009
  2. By: Brülhart, Marius; Sbergami, Federica
    Abstract: We investigate the impact of within-country spatial concentration of economic activity on country-level growth, using cross-section OLS and dynamic panel GMM estimation. Agglomeration is measured alternatively through measures of urbanization and through indices of spatial concentration based on data for sub-national regions. Across estimation techniques, data sets and variable definitions, we find evidence that supports the "Williamson hypothesis": agglomeration boosts GDP growth only up to a certain level of economic development. The critical level is estimated at some USD 10,000, corresponding roughly to the current per-capita income level of Brazil or Bulgaria. This implies that the tradeoff between national growth and inter-regional equality may gradually lose its relevance.
    Keywords: agglomeration; dynamic panel estimation; economic growth; urbanisation
    JEL: O4 R11 R12
    Date: 2008–08
  3. By: Behrens, Kristian; Robert-Nicoud, Frédéric
    Abstract: Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities attract the most productive agents, select the best of them, and make the selected ones even more productive via various agglomeration economies. This paper provides a microeconomically founded model of vertical city differentiation in which the latter two mechanisms (`agglomeration' and `selection') operate simultaneously. Our model is both rich and tractable enough to allow for a detailed investigation of when cities emerge, what determines their size, and how they interact through the channels of trade. We then uncover stylised facts and suggestive econometric evidence that are consistent with the most distinctive equilibrium features of our model. We show, in particular, that larger cities are both more productive and more unequal (`polarised'), that inter-city trade is associated with higher income inequalities, and that the proximity of large urban centres inhibits the development of nearby cities.
    Keywords: agglomeration; entrepreneur heterogeneity; firm selection; income inequalities; urban systems; urbanization
    JEL: F12 R12
    Date: 2008–10
  4. By: Farmanesh, Amir
    Abstract: This paper presents a spatial analysis on regional dimensions of poverty and economic development across provinces of Iran. It offers the first ever estimation made in developing countries using this strand of "New Economic Geography" (NEG) models and provides a comparison of the results between previously studied developed countries and Iran as a developing country. The goal of this study is to offer an analysis of the effects of agglomeration and dispersion economies on the patterns of regional economic development in Iran. It analyzes the linkages among adjacent provinces as well as effects of agglomeration and dispersion economies on the patterns of Iran's regional economic development through empirical estimation of two of the NEG models. First, it presents an estimation of a "Market Potential Function" (MPF), in which wages are associated with proximity to consumer markets. Second, the paper estimates an augmented MPF derived from the Krugman model of economic geography. The parameters in this model estimate the importance of transportation cost and economies of scale. The estimation results suggest that Iran showed generally good fit to both models and satisfied both MPF and Krugman model specifications. Compared to other similar studies in developed countries, Iran shows smaller returns to scale and consistently higher size of the effect of market potential on wages.
    Keywords: New Economic Geography; Spatial agglomeration; Market potential; Market structure; Increasing returns to scale; Transport costs; Iranian economy; Economic development in Iran; Income distribution in the provinces of Iran; Empirical evaluation
    JEL: O10 F12 O15 R12
    Date: 2009–01–02
  5. By: Pierre Philippe Combes (University of AixMarseille and CEPR); Gilles Duranton (University of Toronto and CEPR); Laurent Gobillon (Institut National d’Etudes Démographiques, PSEINRA, and CREST); Diego Puga (IMDEA, Universidad Carlos III and CEPR); Sébastien Roux (CREST INSEE)
    Abstract: Firms are more productive on average in larger cities. Two explanations have been offered: agglomeration economies (larger cities promote interactions that increase productivity) and firm selection (larger cities toughen competition allowing only the most productive to survive). To distinguish between them, we nest a generalised version of a seminal firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. We assess the relative importance of agglomeration and firm selection using French establishment-level data and a new quantile approach. Spatial productivity differences in France are mostly explained by agglomeration.
    Keywords: agglomeration; firm selection; productivity, cities
    JEL: C52 R12 D24
    Date: 2009–02–20
  6. By: Fujita, Masahisa; Thisse, Jacques-François
    Abstract: Paul Krugman has clarified the microeconomic underpinnings of both spatial economic agglomerations and regional imbalances at national and international levels. He has achieved this with a series of remarkably original papers and books that succeed in combining imperfect competition, increasing returns, and transportation costs in new and powerful ways.Yet, not everything was brand new in New Economic Geography. To be precise, several disparate pieces of high-quality work were available in urban economics and location theory. Our purpose in this paper is to shed new light on economic geography through the lenses of these two fields of economics and regional science.
    Keywords: Economic geography; Location theory; Trade; Urban economics
    JEL: F12 L13 R12
    Date: 2008–12
  7. By: Briant, Anthony; Combes, Pierre-Philippe; Lafourcade, Miren
    Abstract: This paper evaluates, in the context of economic geography estimates, the magnitude of the distortions arising from the choice of zoning system, which is also known as the Modifiable Areal Unit Problem (MAUP). We consider three standard economic geography exercises (the analysis of spatial concentration, agglomeration economies, and trade determinants), using various French zoning systems differentiated according to the size and shape of spatial units, which are the two main determinants of the MAUP. While size matters a little, shape does so much less. Both dimensions seem to be of secondary importance compared to specification issues.
    Keywords: agglomeration; concentration; gravity; MAUP; wage equation
    JEL: C10 C43 O18 R12 R23
    Date: 2008–08
  8. By: Combes, Pierre-Philippe; Lafourcade, Miren; Thisse, Jacques-François; Toutain, Jean-Claude
    Abstract: This paper uses a unique database that provides value-added, employment, and population levels for the entire set of French departments for the years 1860, 1930, and 2000. These data cover three sectors: agriculture, manufacturing, and services. This allows us to study the evolution of spatial inequalities within France and to test the empirical relevance of economic geography predictions over the long run. The evidence confirms the existence of a bell-shaped evolution of the spatial concentration of manufacturing and services. In contrast, labor productivity has been converging across departments. Last, our study also confirms the presence of strong agglomeration economies during the full time-period. Market potential during the first sub-period (1860-1930), and higher education during the second (1930-2000), together with sectoral diversity, account for the spatial distribution of these gains.
    Keywords: agglomeration economies; economic geography; economic history; human capital
    JEL: N93 N94 O18 R12
    Date: 2008–10
  9. By: Daniel F. Heuermann (Institute for Labour Law and Industrial Relations in the EC, University of Trier)
    Abstract: Bridging the gap between the literatures on industrial change and human capital externalities we investigate the joint importance of aggregate regional education and job turnover for productivity effects to arise within firms and regional industries. On the level of regional industries we find strong evidence for the mutual dependence of skills and change inasmuch as regional human capital is a crucial ingredient for industrial change to be productivity enhancing, while human capital externalities arise first and foremost in dynamic labor markets. On the firm level, we find human capital externalities to accrue predominantly to growing firms which benefit from sharing, matching, and learning externalities arising from a large supply of human capital in skilled, dynamic labor markets. Despite the joint impact of human capital and industrial change on productivity we find only weak evidence that inter-industry differences in labor market dynamics of highly qualified workers shape the geography of industry location across German regions.
    Keywords: Human Capital Externalities, Job Turnover, Industrial Change
    JEL: D62 J24 R11 R12
    Date: 2009–02
  10. By: Overman, Henry G.; Puga, Diego
    Abstract: We provide empirical evidence on the role of labour market pooling in determining the spatial concentration of UK manufacturing establishments. This role arises because large concentrations of employment iron out idiosyncratic shocks and improve establishments' ability to adapt their employment to good and bad times. We measure the likely importance of labour pooling by calculating the fluctuations in employment of individual establishments relative to their sector and averaging by sector. Our results show that sectors whose establishments experience more idiosyncratic volatility are more spatially concentrated, even after controlling for a range of other industry characteristics that include a novel measure of the importance of localized intermediate suppliers.
    Keywords: labour market pooling; spatial concentration
    JEL: R12 R30
    Date: 2009–02
  11. By: Berliant, Marcus; Watanabe, Hiroki
    Abstract: We criticize the theories used to explain the size distribution of cities. They take an empirical fact and work backward to obtain assumptions on primitives. The induced theoretical assumptions on consumer behavior, particularly about their inability to insure against the city-level productivity shocks in the model, are untenable. With either self insurance or insurance markets, and either an arbitrarily small cost of moving or the assumption that consumers do not perfectly observe the shocks to firms' technologies, the agents will never move. Even without these frictions, our analysis yields another equilibrium with insurance where consumers never move. Thus, insurance is a substitute for movement. We propose an alternative class of models, involving extreme risk against which consumers will not insure. Instead, they will move, generating a Fréchet distribution of city sizes that is empirically competitive with other models.
    Keywords: Zipf's Law; Gibrat's Law; Size Distribution of Cities; Extreme Value Theory
    JEL: R12
    Date: 2009–02–19
  12. By: Michaels, Guy; Rauch, Ferdinand; Redding, Stephen J
    Abstract: This paper presents new evidence on urbanization using sub-county data for the United States from 1880-2000 and municipality data for Brazil from 1970-2000. We show that the two central stylized features of population growth for cities - Gibrat's Law and a stable population distribution - are strongly rejected when both rural and urban areas are considered. Population growth exhibits a U-shaped relationship with initial population density, and only becomes uncorrelated with initial population density at the high densities found in predominantly urban areas. We provide evidence that the explanation for these patterns lies in different employment growth dynamics in the agricultural and non-agricultural sectors and the process of structural transformation away from the agricultural sector.
    Keywords: Gibrat's Law; Structural Transformation; Urbanization
    JEL: E20 R11 R12
    Date: 2008–10
  13. By: Okubo, Toshihiro; Picard, Pierre M; Thisse, Jacques-François
    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
  14. By: Audretsch, David B; Dohse, Dirk; Niebuhr, Annekatrin
    Abstract: In this paper we investigate the determinants of entrepreneurial activity in a cross section of German regions for the period 1998-2005. Departing from the knowledge spillover theory of entrepreneurship, the focus of our analysis is on the role of the regional environment and, in particular, knowledge and cultural diversity. Our main hypothesis is that both, knowledge and diversity, have a positive impact on new firm formation. As the determinants of regional firm birth rates might differ considerably with respect to the necessary technology and knowledge input of new businesses, we consider start-ups at different technology levels. The regression results indicate that regions with a high level of knowledge provide more opportunities for entrepreneurship than other regions. Moreover, while sectoral diversity tends to dampen new firm foundation, cultural diversity has a positive and highly significant impact on technology oriented start-ups. This suggests that the diversity of people is more conducive to entrepreneurship than the diversity of firms. We conclude that regions characterized by a high level of knowledge and cultural diversity form an ideal breeding ground for technology oriented start-ups.
    Keywords: diversity; entrepreneurship; knowledge spillover
    JEL: M13 O18 R11
    Date: 2008–08
  15. By: Chris Forman; Avi Goldfarb; Shane Greenstein
    Abstract: Did the diffusion of the Internet lead to convergence or divergence of local wages? We examine the relationship between business use of advanced Internet technology and regional variation in US wage growth between 1995 and 2000.We show that business use of advanced Internet technology is associated with wage growth but find no evidence that the Internet contributed to regional wage convergence. Advanced Internet technology is only associated with wage growth in places that were already well off in terms of income, education, population, and industry. Overall, advanced Internet explains one-quarter of the difference in wage growth between these counties and all others.
    JEL: O33 R11
    Date: 2009–02
  16. By: Siqi Zheng; Matthew E. Kahn; Hongyu Liu
    Abstract: Over the last thirty years, China's major cities have experienced significant income and population growth. Much of this growth has been fueled by urban production spurred by world demand. Using a unique cross-city panel data set, we test several hypotheses concerning the relationship between home prices, wages, foreign direct investment and ambient air pollution across major Chinese cities. Home prices are lower in cities with higher ambient pollution levels. Cities featuring higher per-capita FDI flows have lower pollution levels.
    JEL: F21 Q53 R31
    Date: 2009–02
  17. By: Schiöler, Linus (Statistical Research Unit, Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Information about the spatial spread of epidemics can be useful for many purposes. In this paper, the spatial aspect of Swedish influenza data is analyzed with the main aim of finding patterns that could be useful for statistical surveillance of the outbreak, i.e. for detecting an increase in incidence as soon as possible. In Sweden, two types of data are collected during the influenza season: laboratory diagnosed cases (LDI), collected by a number of laboratories, and cases of influenza-like illness (ILI), collected by a number of selected physicians. Quality problems were found for both types of data but were most severe for ILI. No geographical pattern was found. Instead, it was found that the influenza outbreak starts at about the same time in the major cities and then occurs in the rest of the country. The data were divided into two groups, a metropolitan group representing the major cities and a locality group representing the rest of the country. The properties of the metropolitan group and the locality group were studied and it was found that the time difference in the onset of the outbreak was about two weeks. This justifies a different spatial model than the one usually used for infectious diseases.
    Keywords: Influenza; Spatial patterns; outbreak
    JEL: C10
    Date: 2009–01–27
  18. By: Ken Sanford (Graduate Student, Department of Economics, Gatton College of Business and Economics, University of Kentucky); William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky)
    Abstract: This analysis examines how differences in state income tax rates, as well as other state and local taxes and public service expenditures, influence the choice of state of residence for households (federal tax filers) moving into multistate metropolitan statistical areas (MSA) using data from the one in twenty sample of the 2000 Census of Population and Housing microdata. MSAs that are on state borders provide a spatial discontinuity – discrete differences in tax rates within a single labor market. These MSAs allow residents to live in one state and work in another state. After controlling for other factors believed to affect household location, differences in state income tax rates have a statistically significant impact on the probability a household locates in the low tax state within an MSA. Complicating the analysis of location choice is the presence of state reciprocity agreements. These bilateral agreements between state governments allow taxpayers to pay income tax based on place of residence rather than their place of work. The theoretical roles of these agreements are discussed and the impacts of these laws are tested. The results suggest that reciprocity agreements alter the role that taxes play in location.
    JEL: H73 H71 J61
    Date: 2009–01
  19. By: Redding, Stephen J
    Abstract: This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale and transport costs. After outlining the canonical core and periphery model, the paper examines the empirical evidence on three of its central predictions: the role of market access in determining factor prices, the related home market effect in which demand has a more than proportionate effect on production, and the potential existence of multiple equilibria. In reviewing the evidence, we highlight issues of measurement and identification, alternative potential explanations, and remaining areas for further research.
    Keywords: Home Market Effect; Market Access; Multiple Equilibria; New Economic Geography
    JEL: F12 F14 O10
    Date: 2009–01
  20. By: Gautier, Pieter A; Zenou, Yves
    Abstract: We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labour-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labour market outcomes.
    Keywords: ethnic minorities; job search; multiple job centres; spatial labour markets; Transportation mismatch
    JEL: D83 J15 J64 R1
    Date: 2008–11
  21. By: Kala Seetharam Sridhar
    Abstract: For a country like India that contains a large number of Urban Agglomerations (UAs), suburbanisation has drawn little attention of the literature. I focus on this sparsely studied issue in this work. Population, household and employment density gradients for India's UAs, using Mills' two-point technique are calculated. Next, population, household and employment gradient regressions are estimated.
    Keywords: literature, urban agglomeratinos, India, suburbanisation, density gradient, Mill's two point technique, population gradient, employment, household, regressions, exponential density function, business, UAs, metro area
    Date: 2009
  22. By: William Hoyt (Martin School of Public Policy and Administration and Department of Economics, University of Kentucky); Paul A. Coomes (Department of Economics and College of Business, University of Louisville); Amelia M. Biehl (Department of Economics, University of Southern Indiana)
    Abstract: Property tax limitations, as well as other tax and expenditure restrictions on state and local governments in the United States, date back to the late nineteenth century. A surge in property tax limitation legislation occurred in the late 1970s and early 1980s, and its effects on government revenue, school financing, and educational quality have been studied extensively. However, there is surprisingly little literature on how property tax limits affect housing markets. For the first time, we examine the impacts of property tax limitations on housing growth, in addition to their impacts on housing prices. Using state-level data over twenty-three years, we find that property tax limits increase housing prices (indexes) by approximately 1.6%. These limits appear to have little impact on the growth in the housing stock, as measured by the number of permits. Our evidence suggests that this is because while property tax limits reduce property taxes they also increase the price of housing. These two counteracting effects lead to ambiguous impacts on the gross price of housing.
    JEL: H71 R31
    Date: 2009–01
  23. By: Alan Manning (London School of Economics)
    Abstract: This paper shows, using data from both the US and the UK, that average plant size is larger in denser markets. However, many popular theories of agglomeration – spillovers, cost advantages and improved match quality – predict that establishments should be smaller in cities. The paper proposes a theory based on monopsony in labour markets that can explain the stylized fact – that firms in all labour markets have some market power but that they have less market power in cities. It also presents evidence that the labour supply curve to individual firms is more elastic in larger markets.
    Keywords: Agglomeration, Labour Markets, Monopsony, monopsony papers
    JEL: J21 J42 R23
    Date: 2008–12
  24. By: Martin, Philippe; Mayer, Thierry; Mayneris, Florian
    Abstract: This paper analyzes empirically a public policy promoting industrial clusters in France. Cluster policies have become popular in many countries but have not been extensively evaluated empirically. We use data on production and employment for firms that benefited from the policy and on firms that did not, both before and after the policy started. We first show that the policy selected firms in relative decline. Furthermore, our results suggest that the policy had no major effect on their productivity but may have helped them in terms of employment.
    Keywords: clusters; localization economies; public policies
    JEL: C23 R10 R11 R12
    Date: 2008–12
  25. By: Yasuhiro Sato (Graduate School of Economics, Osaka University (Japan)); Takatoshi Tabuchi (Faculty of Economics, University of Tokyo (Japan)); Kazuhiro Yamamoto (Graduate School of Economics, Osaka University (Japan))
    Abstract: In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves entrepreneurial decision by using data on Japanese prefectures. Our results show that a larger market size measured by the population density leads to higher incentive of people to become entrepreneurs. a 10 percent increase in the population density increases the share of people who wish to become entrepreneurs by 2 percent. In contrast, the self-employment ratio is lower in prefectures with higher population density, which suggests that the market size has different impacts on the entrepreneurship in different stages.
    Keywords: market size, entrepreneurship, density economies, market expansion
    JEL: J62 L26 R12
    Date: 2009–02
  26. By: Güngör Karakaya (Université Libre de Bruxelles, Dulbéa)
    Abstract: In this paper we analyze the problem of population ageing in terms of non-medical care needs of persons who are dependent or have lost their autonomy, in order to provide the various public and private administrations active in these fields with some food for thought. The anticipated increase in dependency poses significant challenges in terms of needs evolution and financing. Using administrative data on the Belgian population to build indicators on the prevalence of dependency at home in the three regions in 2001, we find that the likelihood of a sustained increase in the Flemish prevalence rates ultimately amplifies the magnitude of the financing problems that the Flemish dependency insurance scheme has experienced since its first years of operation. Results also show that the smaller increases or the decreases (according to the scenario selected) expected in Wallonia and Brussels are likely to mitigate concern about the sustainability of any long-term care insurance in Wallonia and therefore to facilitate its eventual introduction.
    Keywords: Long-term care, Old age assistance, Demographic changes, Regional inequalities, Projection
    JEL: I12 I18 J11 J14
    Date: 2009–02
  27. By: Magnusson, Kristin (Dept. of Economics, Stockholm School of Economics)
    Abstract: The current economic slowdown in the United States and the decline in remittance growth to some Latin American countries have intensified the interest in the relationship between these variables. We investigate whether host country conditions affect remittance outflows to Latin America, focusing on the roles of regional U.S. business cycles, geographical variation in immigrant density and sectoral factors. Using quarterly data for 1995-2008, we find that remittance flows are strongly influenced by economic conditions in the specific regions of the U.S. where migrants are clustered, as well as in the sectors especially important for immigrants' employment opportunities. The results are in sharp contrast to previous research suggesting that remittance flows are relatively insensitive to fluctuations in the aggregate U.S. business cycle. Precise estimation of these linkages is also shown to matter for gauging the sensitivity of remittances to economic conditions in the home country, and hence the extent to which remittances might buffer domestic shocks as well as transmitting external ones.
    Keywords: Remittances; Business Cycles; Central America; Mexico; United States
    JEL: E32 F15 F22 F24 R11
    Date: 2009–02–16
  28. By: Jan K. Brueckner (University of California, Irvine, USA); Erik T. Verhoef (VU University Amsterdam)
    Abstract: The recent literature on congestion pricing with large agents contains a remarkable inconsistency: though agents are large enough to recognize self-imposed congestion and exert market power over prices, they do not take into account the impact of their own actions on the magnitude of congestion tolls. When large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them, the toll system will no longer guide the market to the social optimum. To address this problem, the present paper derives alternate, manipulable toll rules, which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities.
    Keywords: Congestion pricing; market power; aviation
    JEL: R41 R48 D62
    Date: 2009–02–09
  29. By: Sascha Frohwerk
    Abstract: Das Cluster-Modell von Krugman und Venables (1996) erklärt im Rahmen der Neuen Ökonomischen Geographie die Bildung von Agglomerationen bei regional immobilen Arbeitskräften. Die resultierenden Gleichgewichte hängen von der Höhe der Transportkosten ab, die allerdings in beiden Sektoren als gleich hoch unterstellt werden. Der vorliegende Beitrag erweitert dieses Modell um die Möglichkeit sektoral unterschiedlicher Transportkosten. Da eine analytische Lösung nichtmöglich ist, wird eine geeignete Simulationsmethode entwickelt. Anhand von Abbildungen wird dargestellt, welche Gleichgewichte sich bei verschiedenen Werten für die beiden Transportkostensätze ergeben.
    Date: 2008–12

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