nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒04‒05
fourteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Agglomeration and Productivity - evidence from firm-level data By Andersson, Martin; Lööf, Hans
  2. Measures of the Geographic Concentration of Industries: Improving Distance-Based Methods By Eric Marcon; Florence Puech
  3. Spatial Convergence of Regions Revisited: A Spatial Maximum Likelihood Systems Approach By Michael Paffermayr
  4. Fifty Years of Urban Accessibility: The Impact of Urban Railway Network on the Land Gradient in Industrializing Berlin By Gabriel Ahlfeldt; Nicolai Wendland
  5. Returns to Higher Education – a regional perspective By Backman, Mikaela; Bjerke, Lina
  6. FirmsÕ location Under taste and demand heterogeneity By Okubo, Toshihiro; Picard, Pierre M.
  7. Regional convergence and public spending in Italy. Is there a correlation? By Daniele, Vittorio
  8. Generalizing Ripley's K function to inhomogeneous populations By Eric Marcon; Florence Puech
  9. Large-sample inference on spatial dependence By Peter Robinson
  10. Geographic proximity and firm-university innovation linkages: evidence from Great Britain By Laura Abramovsky; Helen Simpson
  11. Metropolitan Areas in Spain and Italy By Rafael Boix; Paolo Veneri
  12. Innovation in New Zealand: Issues of Firm Size, Local Market Size and Economic Geography By Philip McCann; Les Oxley; Hong Shangqin
  13. Does public housing occupancy increase unemployment? By Dujardin, Claire; Goffette-Nagot, Florence
  14. Addressing Regional Inequality Issues in Bangladesh Public Expenditure By Mahmoud, Chowdhury Shameem; Wadood, Syed Naimul; Ahmed, Kazi Sabbir

  1. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Do agglomerations stimulate productivity? An extensive literature on agglomeration economies, or urban increasing returns, has analyzed this question with aggregated spatial data. This paper estimates the relationship between agglomeration and productivity at the firm level using static and dynamic models. It makes use of a rich dataset comprising register information on all manufacturing firms in Sweden with 10 or more employees over the period 1997-2004. Three things emerge. First, firms located in larger regions are more productive when controlling for size, human capital, physical capital, ownership structure, import and export, industry classification and time trend. Second, results from dynamic panel estimations suggest a learning effect in that agglomeration enhances firms’ productivity. Third, the role of agglomeration phenomena does not seem to have a clear coupling to firm size.
    Keywords: productivity; agglomeration economies; spatial externalities; external scale economies; urban increasing returns; spatial selection
    JEL: L25 R12 R30
    Date: 2009–03–25
  2. By: Eric Marcon (AgroParisTech - AgroParisTech, Ecofog - Ecologie des forêts de Guyane - CIRAD : UMR93 - CNRS : UMR2728 - INRA : UR0745 - Université des Antilles-Guyane - Ecole Nationale du Génie Rural des Eaux et des Forêts); Florence Puech (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: This study introduces two new measures of spatial concentration. The proposed M functions constitute an extension to Ripley's functions (Ripley, 1976, 1977). They allow the evaluation of the relative geographic concentration and co-location of industries in a non-homogeneous spatial framework. Some rigorous comparisons with similar recently developed tools prove the relevance of the M functions in the field of spatial economics.
    Keywords: Geographic concentration ; Distance-based methods ; Ripley's K function ; M function
    Date: 2009–04–01
  3. By: Michael Paffermayr
    Abstract: This paper suggests that one should account for the endogeneity of important explanatory variables and the persistence of technology shocks when analyzing spatial convergence among regions.Specifically, it is argued that a systems approach is called for that includes the average growth rate and the initial income level as the endogenous variables. For 212 European regions the estimation results reveal a substantial correlation between the disturbances of the equation explaining initial income per capita and that of its subsequent average growth rate. Moreover, the estimated speed of convergence is found substantially higher in a systems framework. This holds true for both spatial conditional and unconditional convergence.
    Keywords: Spatial beta-convergence, Spatial Solow model, Spatial systems maximum likelihood estimation, Europeanregions
    JEL: R11 C31 O47
    Date: 2009–03
  4. By: Gabriel Ahlfeldt (Chair for Economic Policy, University of Hamburg); Nicolai Wendland (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: As the first to use an archival data set on historical land values of Berlin, Germany, from 1890 to 1936, we exploit exogenous variation in transport technology in order to test the validity of the monocentric city model. Endogenously determining the CBD, we conduct cross-section and timedifference analysis and model the land gradient in terms of straight-line distance and travel times. A counterfactual scenario indicates that a large proportion of urban decentralization is attributable to improvements in transport infrastructure. Controlling for spatial dependency, results suggest that the monocentric model fitted the city structure until the mid 20th century.
    Keywords: Transport Innovations; Land Values; Location Productivity; Economic History
    JEL: N7 N9 R33 O12
    Date: 2008–10
  5. By: Backman, Mikaela (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Bjerke, Lina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The returns to education have been thoroughly investigated and Sweden has shown to have a relatively low return compared to other countries in Europe. Nevertheless, few studies have combined the regional perspective with returns to education. Hence, the purpose of the paper is to analyze regional differences in their returns to higher education within natural science, engineering and medicine. We assume that individuals maximize expected utility; they will try to attain the highest expected return to education as possible. The regional sum of employment possibilities as well as unemployment shares may differ between regions. Therefore, it is plausible to believe that the regional return to education varies between locations which accounted for in the empirical part of the paper. The result shows that there are clear differences between regional classifications concerning returns to higher education. Central urban regions, except the three largest cities and ten largest universities have the highest return to education. These regions may need to compensate the individuals with a higher return. The three largest cities in Sweden have a relatively low return but have other amenities that attract individuals.
    Keywords: returns to higher education; regional attractiveness; Sweden; Mincer equation
    JEL: H52 I21 I22 J61 R11
    Date: 2009–03–25
  6. By: Okubo, Toshihiro (---); Picard, Pierre M. (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE); ---)
    Abstract: In this paper we build a quality-augmented version of an economic geography model where consumers have heterogenous tastes for a set of manufacturing varieties. We discuss a footloose capital model and a footloose entrepreneur model. We show that firms selling the goods with higher values select the region hosting the largest number of consumers. Larger countries thus get better access to the higher quality products. We also show that the effect of spatial selection on firms' spatial distribution crucially depends on the properties of the taste distribution across varieties. Finally, we show that taste heterogeneity smooths the agglomeration patterns but that it should be considered neither as a dispersion force nor as an agglomeration force. Indeed, the introduction of taste heterogeneity makes an initially dispersed economy less dispersed and an initially agglomerated economy less agglomerated.
    Keywords: heterogeneous taste and quality, spatial selection, economic geography, agglomeration, home market effect.
    JEL: F12 F15 R11 R12
    Date: 2008–12
  7. By: Daniele, Vittorio
    Abstract: The aim of this paper is twofold. Firstly, it examines the evolution of regional disparities among the Italian regions during the period 1980-2007. Secondly, the paper analyses the relationship between public spending and regional productivity growth. This analysis is based on the Regional Public Accounts (RPA), a detailed database which measures public financial flows at the territorial level for the period 1996-2006. Results show how the process of both σ and β convergence has mainly concerned labour productivity, while the convergence in per capita GDP has been very weak. The impact of public spending has been different, depending on the expenditure categories and the regions considered. While in the more developed regions of the Northern area of Italy we found a positive correlation between capital expenditure and growth, in the less developed Mezzogiorno the correlation was found only for current expenditure.
    Keywords: Italy; regional convergence; development policy.
    JEL: R58 O18 R38
    Date: 2009–03–29
  8. By: Eric Marcon (AgroParisTech - AgroParisTech, Ecofog - Ecologie des forêts de Guyane - CIRAD : UMR93 - CNRS : UMR2728 - INRA : UR0745 - Université des Antilles-Guyane - Ecole Nationale du Génie Rural des Eaux et des Forêts); Florence Puech (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: In spatial statistics, Ripley's K function (Ripley, 1977) is a classical tool to analyse spatial point patterns. Yet, it faces two major limits: it is only pertinent for homogeneous point processes and it does not allow the weighting of points.We generalize it to get a new function, M, which oversteps these limits and detects spatial structures of inhomogeneous populations of weighted points.
    Keywords: Spatial statistics ; point processes ; Ripley
    Date: 2009–04–01
  9. By: Peter Robinson (Institute for Fiscal Studies and London School of Economics)
    Abstract: <p>We consider cross-sectional data that exhibit no spatial correlation, but are feared to be spatially dependent. We demonstrate that a spatial version of the stochastic volatility model of financial econometrics, entailing a form of spatial autoregression, can explain such behaviour. The parameters are estimated by pseudo Gaussian maximum likelihood based on log-transformed squares, and consistency and asymptotic normality are established. Asymptotically valid tests for spatial independence are developed.</p>
    Date: 2008–10
  10. By: Laura Abramovsky (Institute for Fiscal Studies); Helen Simpson (Institute for Fiscal Studies and CMPO, Bristol)
    Abstract: <p><p>We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate their R&D labs near universities, and whether those that do are more likely to co-operate with, or source knowledge from universities. We find that pharmaceutical firms locate R&D near to frontier chemistry research departments, consistent with accessing localised knowledge spillovers, but also linked to the presence of science parks. In industries such as chemicals and vehicles there is less evidence of immediate co-location, but those innovative firms that do locate near to relevant research departments are more likely to engage with universities.</p></p>
    Keywords: Innovation, geography, spillovers, public research
    JEL: O3 R11 R13 I23
    Date: 2009–01
  11. By: Rafael Boix (Institut d'Estudis Regionals i Metropolitans de Barcelona); Paolo Veneri (Dipartimento di Economia, Università Politecnica delle Marche)
    Abstract: Metropolitan areas concentrate the main share of population, production and consumption in OECD countries. They are likely to be the most important units for economic, social and environmental analysis as well as for the development of policy strategies. However, one of the main problems that occur when adopting metropolitan areas as units of analysis and policy in European countries is the absence of widely accepted standards for identifying them. This severe problem appeared when we tried to perform comparative research between Spain and Italy using metropolitan areas as units of analysis. The aim of this paper is to identify metropolitan areas in Spain and Italy using similar methodologies. The results allow comparing the metropolitan realities of both countries as well as providing the metropolitan units that can be used in subsequent comparative researches. Two methodologies are proposed: the Cheshire-GEMACA methodology (FUR) and an iterative version of the USA-MSA algorithm, particularly adapted to deal with polycentric metropolitan areas (DMA). Both methods show a good approximation to the metropolitan reality and produce very similar results: 75 FUR and 67 DMA in Spain (75% of total population and employment), and 81 FUR and 86 DMA in Italy (70% of total population and employment).
    Keywords: metropolitan areas, polycentricity, commuting
    JEL: R12
    Date: 2009–03
  12. By: Philip McCann; Les Oxley (University of Canterbury); Hong Shangqin
    Abstract: In this paper we report empirical evidence from a mixed methods approach to investigating the drivers of innovation in New Zealand. The evidence comes from a primary questionnaire survey we conducted across seventy-five local firms plus fifteen face-to-face case study interviews. Our survey response data is analysed using four different types of probability models and the various models are all found to be largely consistent with each other. The insights from these estimation methods are then bolstered by detailed follow-up case studies of individual firms in different industries and product groups regarding their innovation and competition experiences. Our results from both forms of evidence-gathering suggest that in a small and isolated local market such as New Zealand, smallness in terms of firm size may not be an advantage for innovation. The reason appears to be that the notion of ‘small’ itself may have an absolute minimum threshold, below which translating entrepreneurship into innovation becomes problematic. As such, applying theories of local economic development to local economies which exhibit similar features to New Zealand may require us to adjust our thinking in order to take account of different absolute scale effects in different types of economies.
    Keywords: Innovation; New Zealand; SME; Economic Geography
    JEL: O31 O33 O38
    Date: 2009–04–01
  13. By: Dujardin, Claire (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); Goffette-Nagot, Florence (---)
    Abstract: In order to test for the effect of public housing occupancy on unemployment, we estimate a simultaneous probit model of unemployment and public housing. On a Þrst sample, we instrument public housing with the gender composition of children. On a second sample, the instrument is the share of public housing at the city level. We also perform a robustness check that consists in measuring the correlation between unobservables that could explain the effect of public housing on unemployment. As the corresponding level of correlation is low, this check reinforces our result of no effect of public housing on unemployment.
    Keywords: public housing, unemployment, simultaneous probit models, instrumental variables.
    JEL: R2 J64
    Date: 2008–12
  14. By: Mahmoud, Chowdhury Shameem; Wadood, Syed Naimul; Ahmed, Kazi Sabbir
    Abstract: The public expenditure allocation in Bangladesh has played a substantial role in improvements of physical infrastructure, health, education, community development, etc. during the recent decades. There have been allegations that inequality in the distribution of political power has often led to some extent to a disproportionate public spending, which in turn may hinder prospects of poverty reduction. The current study aims to examine the research question of whether regional inequality issues are properly addressed within the framework of the public expenditure allocation in Bangladesh during the recent years and if not, whether this has been influenced by some other considerations, which are mainly political by nature. We analyze a panel data set where the dependent variable is the (greater district) per capita ADP allocation within a sector and the independent variables are some explanatory variables, and a variable of interest measuring the proportion of the total number of constituencies within the greater district that belongs to the political party in power. In summary, the study provides evidence of some in-built regional inequality features within the public expenditure allocation in Bangladesh in association with the political favoritism issues involved in a supposedly parliamentary democratic system.
    Keywords: Public Expenditure; Regional Inequality; Political Influence in Regional Distribution of Public Expenditure; Panel Data
    JEL: H72 H5 H76 C33
    Date: 2008–03–13

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