nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒10‒24
twenty-one papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Desigualdade econômica regional e spillovers espaciais: evidências para o nordeste do Brasil By Luzia Maria Cavalcante de Melo; Rodrigo Ferreira Simões
  2. Bayesian Estimation of Spatial Externalities Using Regional Production Function: The Case of China and Japan By Hashiguchi, Yoshihiro
  3. Simple Regression Based Tests for Spatial Dependence By Benjamin Born; Jörg Breitung
  4. Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth By Michael Fritsch; Florian Noseleit
  5. The spatial structure of the financial development in Brazil By Marco Crocco; Fabiana Santos; Pedro Amaral
  6. Spatial Effects of Open Borders on the Czech Labour Market By Michael Moritz
  7. Structural Funds and Economic Divide in Italy By Aiello, Francesco; Pupo, Valeria
  8. Gibrat's Law for (All) Cities: A Rejoinder By Yannis M. Ioannides; Spyros Skouras
  9. Regional inequality and growth: the role of interregional trade in the Brazilian economy By Aline Souza Magalhães; Edson Domingues
  10. Disparités régionales et diffusion des TIC en Tunisie By BEN YOUSSEF, Adel; METHAMEM, Raouchen; M'HENNI, Hatem
  11. Tax Competition and Income Sorting: Evidence from the Zurich Metropolitan Area By Christoph A. Schaltegger; Frank Somogyi; Jan-Egbert Sturm
  12. Teorias do desenvolvimento regional e suas implicações de política econômica no pós-guerra: o caso do Brasil By Ana Carolina da Cruz Lima; Rodrigo Ferreira Simões
  13. The Importance of Being Early By Pavithra Parthasarathi; Anupam Srivastava; Nikolas Geroliminis; David Levinson
  14. Financial system, innovation and regional development: a study on the relationship between liquidity preference and innovation in Brazil By João Prates Romero; Frederico G. Jayme Jr.
  15. Contacts and Meetings: Location, Duration and Distance Traveled By Nebiyou Tilahun; David Levinson
  16. Access for Performance By Kevin Krizek; David Levinson
  17. How Local Is Travel? By Michael Scharenbroich; Michael Iacono; David Levinson
  18. The land value of local roads By Jason Junge; David Levinson
  19. Pricing externalities from passenger transportation in Mexico city By Parry, Ian W.H.; Timilsina, Govinda R.
  20. Measuring Winners and Losers from the new I-35W Mississippi River Bridge By Shanjiang Zhu; David Levinson; Henry Liu
  21. Is the Wage Curve Formal or Informal? Evidence for Colombia By Ramos, Raul; Duque, Juan C.; Surinach, Jordi

  1. By: Luzia Maria Cavalcante de Melo (Cedeplar-UFMG); Rodrigo Ferreira Simões (Cedeplar-UFMG)
    Abstract: Objective of this study is to identify existence of spatial dependence between the capital microregions of the Northeast of Brazil, as well as the existence of spatial spillovers on the growth of GDP per capita between these cities, in 2000-2006. For this it was estimated an econometric model space, using a matrix of spatial weights which were considered as the capital of neighboring microregions including the travel time to the other is up to two hours, which had a sample of 166 geographical units of analysis. The results show that in the period analyzed, the economic performance of capital microregions of the Northeast was not affected by the performance of its neighbors, ie, there is the presence of spillovers between municipalities located in the sample.
    Keywords: Northeast, Growth, Location, Spillovers
    JEL: R11 R12
    Date: 2009–09
  2. By: Hashiguchi, Yoshihiro
    Abstract: This paper used regional panel data for Chinese provinces from 1979 to 2003, and for Japanese prefectures from 1955 to 1998, to estimate the spatial externalities (or spatial multiplier effects) using a production function and Bayesian methodology, and to investigate the long-run behavior of the spatial externalities of each country. According to the estimation results, China's spatial externalities increased its domestic production significantly after 1994, which tended to increase until 2003. Before 1993, however, its spatial externalities were not significant. Japan's spatial externalities showed fluctuating values throughout the sample period. Furthermore, the movement of the spatial externalities was correlated with Japan's business conditions: the externalities showed a high value in the economic boom, and a low value in the economic depression. This could mean that spatial externalities depend mainly on business conditions.
    Keywords: Spatial Externalities; Bayesian Estimation; Production Function
    JEL: E23 N95 C11
    Date: 2009–10
  3. By: Benjamin Born; Jörg Breitung
    Abstract: We propose two simple diagnostic tests for spatial error autocorrelation and spatial lag dependence. The idea is to reformulate the testing problem such that the test statistics are asymptotically equivalent to the familiar LM test statistics. Specically, our version of the test is based on a simple auxiliary regression and an ordinary regression t-statistic can be used to test for spatial autocorrelation and lag dependence. We also propose a variant of the test that is robust to heteroskedasticity. This approach gives practitioners an easy to implement and robust alternative to existing tests. Monte Carlo studies show that our variants of the spatial LM tests possess comparable size and power properties even in small samples.
    Keywords: LM test, Moran I test, spatial correlation
    JEL: C12 C21
    Date: 2009–10
  4. 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)
    Abstract: We investigate the effects that regional start-up activity has on employment in new and in incumbent businesses. The analysis is performed for West German regions over the 1987-2002 period. It shows that the effects of new businesses on employment in the incumbents are significantly positive and that this indirect effect on incumbent employment leads to more jobs than what is created by the newcomers. We find that the effect of new business formation on incumbents is exclusively driven by start-ups that survive a certain period of time. We draw conclusions for policy and for further research.
    Keywords: Entrepreneurship, new business formation, regional development, direct and indirect effects
    JEL: L26 M13 O1 O18 R11
    Date: 2009–10–06
  5. By: Marco Crocco (Cedeplar-UFMG); Fabiana Santos (Cedeplar-UFMG); Pedro Amaral (Cedeplar-UFMG)
    Abstract: This paper explores the financial development in Brazil. It focuses on the impacts of the development level of a municipality’s financial system over its neighborhood, under the light of the Central Place Theory. Using a GMM estimator for a spatial panel model with an endogenous spatial lag and spatial moving average errors we investigate the spatial structure of the financial system in Brazil. The results point to a negative spatial association between the Brazilian municipalities’ financial system, in the way that a municipality with more developed financial system tends to be surrounded by municipalities with less developed financial systems.
    Keywords: financial development, spatial structure, bank strategy, Brazil
    JEL: O16 R12 G21
    Date: 2009–09
  6. By: Michael Moritz (Institute for Employment Research)
    Abstract: Hardly analysed in the literature the fall of the Iron Curtain had also effects on the regional structures of the labour markets in the Central and Eastern European Countries (CEECs). Focusing on the Czech Republic I analyse whether during the undoubtedly increasing integration of markets the Czech border region close to the Western European high-wage countries benefited from its geographical position. Even without transnational free labour mobility, free trade and outsourcing of production activities can lead to shifts in the labour demand and wage structure with respect to different skill groups. According to the theoretical background these integration effects should be stronger in border regions.
    Keywords: regional labour markets, border regions, international trade, employment, wage inequality
    Date: 2009–10–08
  7. By: Aiello, Francesco; Pupo, Valeria
    Abstract: This paper aims to provide a contribution to the debate on the effectiveness of cohesion policies in Italy. The focus is on the territorial effects of EU spending from 1996 to 2007. The empirical analysis is based on the estimate of an expanded neoclassical growth model in which the Structural Funds are one of the variables that explain the convergence across Italian regions. Using panel data and a dynamic panel estimator we find that the Structural Funds, even having had a greater impact in the South compared to the Centre-North, have not contributed to reduce the economic divide in Italy.
    Keywords: Structural Funds; Regional Policy; Economic Divide in Italy
    JEL: R58 H50 O47
    Date: 2009–10–14
  8. By: Yannis M. Ioannides; Spyros Skouras
    Abstract: We establish that the debate between Eeckhout (2004; 2009) and Levy (2009) has still not resolved the key issue of whether the distribution of large US urban places in 2000 is consistent with a lognormal for the intire size range. We resolve this by introducing a new distribution function which switches between a lognormal and a power distribution and estimating it with the data used by Eeckhout and Levy (2009). We find that there is a sudden transition from lognormality to power behavior as city populations icrease above sudden transition from lognormality to power behavior as city populations increase above 100,000. Gibrat's law holds for most cities but a power law holds for most of the population.
    Keywords: Gibrat's Law, Zipf's law, upper tail, mixture of distributions, switching regressions, urban evolution, urban heirarchy
    JEL: D30 D51 J61 R12 C24
    Date: 2009
  9. By: Aline Souza Magalhães (Cedeplar-UFMG); Edson Domingues (Cedeplar-UFMG)
    Abstract: This paper deals with interregional trade in the Brazilian Economy, estimating its role on efficiency, international competitiveness and regional inequality. Our modeling encompasses much detail. Firstly, we use a large-scale multi-regional computable general equilibrium (CGE) model of Brazil. The model is bottom-up for Brazil's 27 states. Despite the high level of regional disaggregation, the level of sectoral disaggregation is also high, at 36 sectors. Applying the CGE model in simulation exercises, we explore the impacts of reducing transport costs among Brazilian states, identifying the most relevant links for different economic goals (national growth, production costs and regional inequality). The procedure is similar to the “field of influence” approach in the input-output literature (Hewings et al, 2005). We find that trade among most developed states have impact on national growth and international competitiveness, but can also increase regional inequality.
    Keywords: CGE modeling, regional trade, inequality
    JEL: R11 R13
    Date: 2009–09
  10. By: BEN YOUSSEF, Adel; METHAMEM, Raouchen; M'HENNI, Hatem
    Abstract: The aim of this article consists in showing in what the emergence of new generation of information and communication technologies can be a worsening factor of imbalances between urban zones and rural zones and contribute to a thickening of the urban zones. Contrary to presupposed theoretical praising the capacity of these technologies to rebalance the development and to reverse the location of economic agents with their location. We will show in what these technologies could lead to a greater urban concentration in the less developed Countries (LDC’s). Indeed, four complementary explanatory factors are explained and illustrated in the case of Tunisia. The territorial dynamics engaged by the concentration of industries in the cities finds a second breath with the ICT.
    Keywords: disparités spatiales; fracture numérique; Technologies de l’information et de la communication; Exode rural; localisation spatiale.
    JEL: R58 R0 R11
    Date: 2009–03
  11. By: Christoph A. Schaltegger (economiesuisse, University of St. Gallen and CREMA); Frank Somogyi (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Jan-Egbert Sturm (ETH Zürich, KOF Swiss Economic Institute, CESifo)
    Abstract: In this paper, we provide empirical evidence for the influence of income taxes on the choice of residence of taxpayers at the local level. The fact that Swiss communities can individually set tax multipliers thereby shifting the progressive tax scheme which is fixed at the cantonal (state) level enables us to study the effect of differences in income taxation on individuals’ choice of location within an economically and culturally homogeneous region. Using panel IV regressions covering the years 1991-2003 and 171 communities in the Swiss canton of Zurich and spatial error regressions for the 171 communities in 2003, we find substantial evidence for income sorting.
    Keywords: tax competition, fiscal federalism, income segregation, income tax
    JEL: H71 H73 R50
    Date: 2009–10
  12. By: Ana Carolina da Cruz Lima (Cedeplar-UFMG); Rodrigo Ferreira Simões (Cedeplar-UFMG)
    Abstract: Discussions about the regional question gained new impetus in the post-war and its ideas influenced the regional economic planning in many countries, especially in Latin America. This paper describes the main characteristics of four theories developed in this period: The Theory of Growth Pole, the Theory of Circular Cumulative Causation, the Theory of Unbalanced Growth and the Export Base Theory. After that we analyze how these theories influenced the regional planning in Brazil between 1950 and 1980. The analysis of the main national plans of development shows that the policy makers tried to follow these theoretical recommendations. However, the results of these policies were limited by several misinterpretations, like the exaggerate emphasis on the import replacing without diversification of the exportations, and the national development of long-term has been compromised. After this period of state intervention, there were many changes in the economic environment, including in the mainstream about the regional development.
    Keywords: Regional Development Theories, Economic Planning, Regional Development Policies
    JEL: R11
    Date: 2009–09
  13. By: Pavithra Parthasarathi; Anupam Srivastava; Nikolas Geroliminis; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: The assumption that the penalty for being early is less than that for being late was put forward by Vickrey (1963) who analyzed how commuters compare penalties in the form of schedule delay (due to peak hour congestion), against penalties in the form of reaching their destination (ahead or behind their desired time of arrival). This assumption has been tested by many researchers since then for various applications, especially in modeling congestion pricing (Arnott et al., 1990) where it is critical to understand the tradeoff between schedule delay and travel delay. Key findings are summarized in the second section of this paper. This research aims to test this hypothesis of earliness being less expensive than lateness using empirical data at different levels and across different regions. New methods to estimate the ratio of earliness to lateness for different types of datasets are developed, which could be used by agencies to implement control policies like congestion pricing or other schemes more accurately. Travel survey data from metropolitan areas provide individual travel patterns while loop detector data provide link level traffic flow data.
    Keywords: Schedule Delay, Travel Time, Traffic, Travel Behavior.
    JEL: R41 R42 R48 J22
    Date: 2009
  14. By: João Prates Romero (Cedeplar-UFMG); Frederico G. Jayme Jr. (Cedeplar-UFMG)
    Abstract: This paper discusses and assesses the features of the Brazilian Financial System, as well as the impacts of Liquidity Preference on Credit and Regional Development in Brazil. Precisely, we test the relationship between credit and development, and the role of banks in regional development. We estimate a panel across states in Brazil in order to test the impact of liquidity preference and other financial variables on Brazilian states credit level. We have also tested the relationship between liquidity preference and other financial variables across states and the number of patents, aiming at testing the importance of technology and innovation on regional development by means of bank system. Conclusions confirm both hypotheses.
    Keywords: Monetary System, National Innovation System, Credit
    JEL: E50 O16 O33
    Date: 2009–08
  15. By: Nebiyou Tilahun; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: The role of contacts on travel behavior has been getting increasing attention. This paper reports on data collected on individualÕs social meetings and the choice of in-home/out-of-home meeting locations as well as the distance travelled and duration of out-home-meetings and its relationship to the type of contact met and other attributes of the meeting. Empirically we show that in-home meetings tend to occur most often with close contacts and less often with distant contacts. The purpose, meeting day, and household size suggest that leisure, weekend and large household size people tend to have their meetings either at their home or at their contactÕs home. In addition when meetings occur outside of the house, the duration is longer for close contacts and distance to the meeting location is directly inßuenced by duration and indirectly by the relationship type. Overall the paper illustrates that relationship type along with other meeting speciÞc and demographic variables is important in explaining the location, duration and distance travelled for social meetings.
    Keywords: Travel behavior, social networks, meetings, network analysis
    JEL: R41 D10 D85 R48
    Date: 2009
  16. By: Kevin Krizek; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: This paper urges that policy decisions be based on important and reliable performance measures. Robust measures that assess the performance of the transportation and land use dimensions of cities, however, are typically missing from such discussionsÑthey typically focus on congestion and mobility. The heart of approach suggested herein lies concept of accessibility: the ability of people to reach the destinations that they need to visit in order to meet their needs. By focusing on accessibilityÑrather than congestion or mobilityÑthis approach produces a more complete and meaningful picture of metropolitan transport and land use. We place accessibility in a position of prominence as a performance measure by (a) describing the use and measurement of accessibility for metropolitan areas, (b) identifying robust, concrete and practical issues about measurement of the concept, (c) and offering prescriptions for resolving measurement issues.
    Keywords: Accessibility, Performance Measures, Transportation, Land Use, Measures of Effectiveness.
    JEL: R12 R14 R41 R48 R52 R53 H11
    Date: 2009
  17. By: Michael Scharenbroich; Michael Iacono; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: This paper analyzes the distribution of travel time across different classes of roads for 47 subjects in the Minneapolis-St. Paul metropolitan area. We use global positioning system (GPS) and geographic information system (GIS) data to analyze subject road use, with the objective of getting a sense for how much time individuals spend on different types of roads during their commute trip (in a sense, how ÒlocalizedÓ their travel is). The results reveal an association between the amounts of time spent on various functional classes of roads and home and work locations. Subjects that live and work in the city of Minneapolis are found to spend a higher percentage of their travel time on lower-level (city and county) roads. The results may be used to further inform local road finance decisions in light of the free-rider problem and other problems associated with current financing mechanisms.
    Keywords: Travel Behavior; Transportation Ð Finance; Global Positioning Systems (GPS)
    JEL: R41 R48 R53
    Date: 2009
  18. By: Jason Junge; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: Roads cover a signiÞcant fraction of the land area in many municipalities. The public provision of roads means this land is exempt from the local property tax. Transferring roads from public to private ownership would not only remove maintenance costs from city budgets, but increase potential property tax revenue as well. This paper calculates the value of the land occupied by roads in sample cities and determines the potential revenue increase if they were subject to property tax. Further calculation computes the extent to which the property tax rate could be reduced if the land value of roads were added to the tax base.
    Keywords: tax, land value, locational analysis, transportation finance
    JEL: R40 R11 R14
    Date: 2009
  19. By: Parry, Ian W.H.; Timilsina, Govinda R.
    Abstract: The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and numerical model. The study shows that the optimal levels of a gasoline tax and a congestion toll on automobiles could generate social benefits, measured in terms of welfare gain, of US$132 and US$109 per capita, respectively, through the reduction of externalities. The largest component of the welfare gains comes from reduced congestion, followed by local air pollution reduction. The optimal toll and tax would, however, double the cost of driving and could be politically sensitive. Still, more than half of those welfare gains could be obtained through a more modest tax or toll, equivalent to $1 per gallon of gasoline. The welfare gains from reforming the pricing of public transportation are small relative to those from reforming the taxation of automobiles. Although the choice among travel modes depends on specific circumstances, in the absence of road travel pricing that accounts for externalities, there will be potential for higher investment in roads relative to mass transit. Given the rapidly increasing demand for transportation infrastructure in Mexico City, careful efforts should be made to include the full social costs of travel in evaluating alternative infrastructure investments.
    Keywords: Transport Economics Policy&Planning,Roads&Highways,Energy Production and Transportation,Transport and Environment,Transport in Urban Areas
    Date: 2009–10–01
  20. By: Shanjiang Zhu; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota); Henry Liu
    Abstract: The opening of the replacement for the I-35W Mississippi River Bridge bridge on September 18th, 2008 provides a unique opportunity to evaluate the impacts generated by this additional link on network performance, and thus empirically test whether a Braess Paradox occurred. Using detailed GPS data to estimate travel times on links and for origin-destination pairs, this research Þnds that while on average travel time improved with the reopening of the bridge, the subsequent restoration of parts of the rest of the network to their pre-collapse conÞguration worsened travel times signiÞcantly on average. In all cases, the distribution of winners and losers indicates clear spatial patterns associated with these network changes. While no Braess paradox was found in this case, the research provides a method for measuring such phenomena.
    Keywords: Network structure, travel behavior, transport geography, commuting, network disruption, Braess paradox
    JEL: R41 D81 D83
    Date: 2009
  21. By: Ramos, Raul (University of Barcelona); Duque, Juan C. (Universidad EAFIT); Surinach, Jordi (University of Barcelona)
    Abstract: The objective of this paper is to analyse the existence or not of a wage curve in Colombia, paying special attention to the differences between formal and informal workers, an issue that has been systematically ignored in the wage curve literature. The obtained results using microdata from the Colombian Continuous Household Survey (CHS) between 2002 and 2006 show the existence of a wage curve with a negative slope for the Colombian economy. Using information on metropolitan areas, the estimates of the elasticity of individual wages to local unemployment rates was -0.07, a value that is very close to those obtained for other countries. However, the disaggregation of statistical information for formal and informal workers has shown significant differences among both groups of workers. In particular, for the less protected groups of the labour market, informal workers (both men and women), a high negatively sloped wage curve was found. This result is consistent with the conclusions from efficiency wage theoretical models and should be taken into account when analysing the functioning of regional labour markets in developing countries.
    Keywords: formal and informal sectors, unemployment, wage curve
    JEL: J30 J60 O17
    Date: 2009–10

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