nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒08‒22
nine papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Are More Start-Ups Really Better? Quantity and Quality of New Businesses and Their Effect on Regional Development By Michael Fritsch; Alexandra Schroeter
  2. Microeconomic foundations of geographical variations in labour productivity By Don J. Webber; Michael Horswell
  3. The Process of European Spatial Development in Austria: The Case of Gürtel Revitalization Project, Vienna By Sameeha Sheth
  4. Spatial Contagion of Global Financial Crisis By Ari Tjahjawandita; Tito Dimas Pradono; Rullan Rinaldi
  5. How Important is Technology? A Counterfactual Analysis By Yilmazkuday, Hakan
  6. The determinants of local employment dynamics in Western Germany By Fuchs, Michaela
  7. Labor Market Pooling, Outsourcing and Labor Contracts By Picard, Pierre M.; Wildasin, David
  8. Territorial innovation dynamics and integration of SMEs into the collaborative innovation projects of French competitiveness poles: the underlying mechanisms By Rani Jeanne Dang
  9. Asymmetric Space Market Adjustment in the London Office Market By Patric Hendershott; Colin Lizieri; Bryan MacGregor

  1. By: Michael Fritsch (Friedrich Schiller University Jena, School of Economics and Business Administration); Alexandra Schroeter (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: Empirical analyses suggest that the employment creating effect of start-ups is highest in regions with a low level of new business formation and that an increase in the regional start-up rate beyond a certain level may lead to negative employment effect. In explaining these results, we assume that the average quality of regional start-ups decreases with the number of start-ups, while the costs of the induced resource reallocation increase. Our model implies that it is not the number of start-ups but their quality that is decisive for their effect on economic development. Therefore, a policy aiming at stimulating economic growth through entrepreneurship should focus on high-quality start-ups.
    Keywords: Entrepreneurship, new business formation, regional development, entrepreneurship policy
    JEL: L26 M13 O1 O18 R11
    Date: 2009–08–13
  2. By: Don J. Webber (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Michael Horswell (Faculty of the Built and Natural Environment, University of the West of England, UK)
    Abstract: This paper initially presents an exploratory spatial data analysis which indicates the presence of small-scale geographical variations in levels and standard deviations of labour productivity across England and Wales in 2005. We identify the presence of spatial autocorrelation for both measures. This finding motivates a subsequent review and extension of theories which suggest the possible presence of small-scale geographical patterns of labour productivity.
    Keywords: Labour productivity; standard deviation; districts and local authorities; geographical autocorrelation
    JEL: R39
    Date: 2009–08
  3. By: Sameeha Sheth
    Date: 2009–08–14
  4. By: Ari Tjahjawandita (Department of Economics, Padjadjaran University); Tito Dimas Pradono (Department of Economics, Padjadjaran University); Rullan Rinaldi (Department of Economics, Padjadjaran University)
    Abstract: The global financial crisis triggered by the credit crisis in the USA as its epicenter, quickly spread across the globe. The crisis starts spreading around the world in the middle of 2007 and along the 2008, where stock markets in major economies fell, followed by collapses of large companies and leading financial institutions. In a world where economies are integrated, the spread of such crisis is unavoidable. In this paper, we try to estimate the spill over effect of the global financial crises across borders and regions. Using spatial econometrics method we employ distance based weight matrix to estimate the spatial dependence and spatial heterogeneity of the crises. On the sensitivity analysis, we also employ weights matrix that is corrected by the governance and the economic freedom index to shows how the virtual space of governance, economic institution and regimes affect the spread of the crises.
    Keywords: Global Financial Crises, Spillover Effect, Institutions, Globalization, Spatial Econometrics
    JEL: G1 C1
    Date: 2009–08
  5. By: Yilmazkuday, Hakan
    Abstract: The multiplier effect of total factor productivity on aggregate output in the one-sector neoclassical growth model is well known, but what about the effects of regional productivity levels on the aggregate output as well as other national and regional variables? This paper studies the impact of productivity changes in the goods sector and the transportation sector in a general equilibrium trade model where agents in each location produce different varieties of a common set of goods. Wages are assumed to be equalized in nominal terms across locations, with differences in purchasing power (due to trade costs) offset by agents' preferences for particular locations in the initial steady-state. Instead of assuming iceberg costs, a transportation sector is modeled to allow an efficient distribution of workers across the production and transportation sectors. The state level data from the U.S. support the model, and the comparative statics exercises have several implications on the national and state-level variables of the U.S. economy. It is shown that if the national production technology level (i.e., the production technology level in each region) is doubled, the national output increases by 5 times, the price dispersion across regions increases by 20%, the population dispersion across regions decreases by 1%, and the ratio of production labor force to transportation labor force increases by 10 times. As the transportation costs approach zero, the national output increases by more than 10 times, the price dispersion across regions decreases by 20%, the population dispersion across regions increases by 1%, and the ratio of production labor force to transportation labor force increases by 5 times.
    Keywords: Technology; Trade; Intermediate Inputs; Transportation
    JEL: R13 R32 R12
    Date: 2009
  6. By: Fuchs, Michaela (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper studies the impact of the local industrial structure on employment dynamics in Western Germany. Following an approach of Combes/Magnac/Robin (2004) for France, local employment growth is decomposed into internal growth resulting from employment changes in existing plants and into external growth determined by employment decisions of newly established plants. The dynamics of both components are estimated simultaneously, taking explicitly into account the timing of the impact of specialization, diversity, and competition in a region. The analysis is conducted for 24 sectors in the West German labor market regions from 1993 to 2002. Estimation results emphasize the positive influence of diversity on both internal and external employment growth, whereas there is no clear result on specialization. A high degree of competition fosters external employment, but is detrimental to internal employment. Dynamic panel regressions show that static externalities dominate. Importantly, the impact of the local industrial structure on employment dynamics does not differ between small and larger plants, nor are there fundamental differences between Western Germany and France." (author's abstract, IAB-Doku) ((en))
    Keywords: Beschäftigungsentwicklung - Determinanten, regionale Verteilung, Wirtschaftsstruktur, Wettbewerbsbedingungen, IAB-Betriebs-Historik-Panel, Betriebsgröße, Westdeutschland, Frankreich, Bundesrepublik Deutschland
    JEL: C33 O18 R11
    Date: 2009–08–14
  7. By: Picard, Pierre M. (University of Luxembourg); Wildasin, David (University of Kentucky)
    Abstract: Economic regions, such as urban agglomerations, face external demand and price shocks that produce income risk. Workers in large and diversified agglomerations may benefit from reduced wage volatility, while firms may outsource the production of intermediate goods and realize benefits from Chamberlinian externalities. Firms may also protect workers from wage risks through fixed wage contracts. This paper explores the relationships between firms' risks, workers' contracts, and the structure of production in cities.
    Keywords: labor market, labor contracts, Chamberlinian externalities
    JEL: R12 R23 J31 J65
    Date: 2009–08
  8. By: Rani Jeanne Dang (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)
    Abstract: Geographical clusters are nowadays considered as a relevant factor for competitiveness, thanks to their innovative capabilities. In this context, public policies based on this approach are flourishing all over the world. The French “Pole of competitiveness” (PoC) policy (Politique des pôles de compétitivité) is one of these initiatives. It is the new French industrial policy aiming at reinforcing the specializations of the economy and the attractiveness of territories by fostering the development of R&D projects, bringing together multinationals, universities, and particularly Small-Middle-Sized-Enterprises (SMEs). Precisely, significant research suggests that in order to innovate SMEs need to cooperate and they are also vital for the functioning, and survival of innovative milieux. Consequently, their integration is a key issue for French PoC’ success. However, the call for projects shows that despite their efforts, French Poles of Competitiveness are not totally successful: a gap remains especially between the massive financial investments helping SMEs innovate and the expected results. Yet, this issue is only analysed by focusing on intrinsic weaknesses of SMEs’ management or on the complexities of existing support programmes supporting SMEs’ innovation. This is insufficient. Innovation dynamics are different from a cluster to another and many failures of innovation policies come from the lack of identification of these specificities. Therefore, this paper aims are threefold: it aims at introducing the French PoC, indeed, the French PoC policy is the main new policy gathering all the nation’s innovation programmes. But few papers are explaining how they work. It aims at identifying the territorial innovation dynamics within PoC and how they work, and then combine this analysis with the intrinsic features of SMEs management, to better understand how they get involved in these dynamics. It finally aims at presenting the preliminary results of the first stage of research: the analysis of a specific French PoC, the “Secured Communicating Solutions”(SCS) PoC as well as the further research questions they raise for the next stage of research.
    Keywords: clusters, interaction, knowledge management, SMEs
    Date: 2009–01–30
  9. By: Patric Hendershott; Colin Lizieri (School of Real Estate & Planning, University of Reading Business School); Bryan MacGregor
    Abstract: Earlier estimates of the City of London office market are extended by considering a longer time series of data, covering two cycles, and by explicitly modeling of asymmetric space market responses to employment and supply shocks. A long run structural model linking real rental levels, office-based employment and the supply of office space is estimated and then rental adjustment processes are modeled using an error correction model framework. Rental adjustment is seen to be asymmetric, depending both on the direction of the supply and demand shocks and on the state of the space market at the time of the shock. Vacancy adjustment does not display asymmetries. There is also a supply adjustment equation. Two three-equation systems, one with symmetric rental adjustment and the other with asymmetric adjustment, are subjected to positive and negative shocks to employment. These illustrate differences in the two systems.
    Keywords: office market models, rental adjustment, asymmetric responses, vacancy rate
    Date: 2009

This nep-geo issue is ©2009 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.