nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒03‒28
twenty-one papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. On spatial equilibria in a social interaction model By MOSSAY, Pascal; PICARD, Pierre M.
  2. Agglomeration and regional employment growth By Dauth, Wolfgang
  3. Urban concentration and economic growth: checking for specific regional effects By Pholo Bala, Alain
  4. Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity? By Shihe Fu; Stephen L. Ross
  5. Urban Growth Drivers and Spatial Inequalities: Europe - a Case with Geographically Sticky People. By Paul C. Cheshire; Stefano Magrini
  6. A theory on the co-evolution of seaports with application to container terminal development in the Rhine-Scheldt Delta By Wouter Jacobs; Theo Notteboom
  7. Localized Spillovers and Knowledge Flows: How Does Proximity Influence the Performance of Plants? By Rikard Eriksson
  8. Technology adoption and club convergence By Alexiadis, Stilianos; Tomkins, Judith
  9. Residential equilibrium in a multifractal metropolitan aera By CAVAILHES, Jean; FRANKHAUSER, Pierre; PEETERS, Dominique; THOMAS, Isabelle
  10. R&D Productivity and the Organization of Cluster Policy: An Empirical Evaluation of the Industrial Cluster Project in Japan By Junichi Nishimura; Hiroyuki Okamuro
  11. How Long Does it Take to Become an Entrepreneurial Society - The Case of German Convergence in Self-Employment By Yvonne Schindele
  12. Trapped by Over-Embeddedness: The Effects of Regional Social Capital on Internationalization By Francesca Masciarelli; Keld Laursen; Andrea Prencipe
  13. How emergence conditions of technological clusters affect their viability? Theoretical perspectives on cluster lifecycles By Joan Crespo
  14. On Geographic Inequality in Japanese Regional Health Insurance By Kumagai, Narimasa
  15. Can Information Asymmetry Cause Stratification? By Berliant, Marcus; Kung, Fan-chin
  16. Gates, hubs and urban primacy in Sub-Saharan Africa By Pholo Bala, Alain
  17. Cycle commuting in Belgium: Spatial determinants and Ôre-cyclingÕ strategies By VANDENBULCKE, GrŽgory; DUJARDIN, Claire; THOMAS, Isabelle; DE GEUS, Bas
  18. Neighbourhood effects and endogeneity issues By DUJARDIN, Claire; PEETERS, Dominique; THOMAS, Isabelle
  19. Chinaâs Regional Disparities: Experience and Policy By Fan, Shenggen; Kanbur, Ravi; Zhang, Xiaobo
  20. On tax competition, public goods provision and jurisdictionsÕ size By PIERETTI, Patrice; ZANAJ, Skerdilajda
  21. Neighborhood effects on unemployment ? A test ˆ la Altonji By DUJARDIN, Claire; GOFFETTE-NAGOT, Florence

  1. By: MOSSAY, Pascal (School of Economics, Henley Business School, University of Reading, U.K.); PICARD, Pierre M. (SoSS, University of Manchester, U.K. and UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Abstract: Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction externalities and competition in the land market. We show that the geographical nature of the residential space tremendously affects the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked.
    Keywords: social interaction, multiple agglomerations, spatial economy
    Date: 2009–10–01
  2. By: Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The advent of the New Economic Geography has spawned a renewed interest in questions of agglomeration. The work expands the research on the impact of agglomeration economies on employment growth by connecting two strands of the empirical literature. A localization index and a cluster index are calculated in order to measure the prevalence of agglomeration. Using these indices, industries and locations that exhibit geographical concentration are identified. The main part of the paper is an econometric analysis. In a dynamic panel data model, the two indices are explicitly used to measure additional dynamic employment growth in agglomerated plants. The study uses panel data that covers all western German employment subject to social security from 1989 to 2006 in 326 districts. I analyze which regional characteristics favor the growth of employment in 191 industries of the manufacturing and service sectors. There is evidence that industrial agglomerations exhibit stronger dynamic growth than other industry/region cells." (author's abstract, IAB-Doku) ((en))
    Keywords: regionaler Arbeitsmarkt, regionale Disparität, Ballungsraum, Beschäftigungsentwicklung, verarbeitendes Gewerbe, Dienstleistungsbereich, Clusteranalyse, Westdeutschland, Bundesrepublik Deutschland
    JEL: O47 R11 R12
    Date: 2010–02–16
  3. By: Pholo Bala, Alain (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Keywords: urban primacy, economic growth, missing data, imputation, semiparametric estimation
    JEL: C14 C30 C49 R15
    Date: 2009–05–01
  4. By: Shihe Fu; Stephen L. Ross
    Abstract: This paper tests whether the correlation between wages and the spatial concentration of employment can be explained by unobserved worker productivity differences. Residential location is used as a proxy for a worker’s unobserved productivity, and average workplace commute time is used to test whether location based productivity differences are compensated away by longer commutes. Analyses using confidential data from the 2000 Decennial Census Long Form find that the agglomeration estimates are robust to comparisons within residential location and that the estimates do not persist after controlling for commutes suggesting that the productivity differences across locations are due to agglomeration, rather than productivity differences across individuals.
    Keywords: Agglomeration, Wages, Sorting, Locational Equilibrium, Human Capital Externalities
    JEL: R13 R30 J24 J31
    Date: 2010–02
  5. By: Paul C. Cheshire; Stefano Magrini
    Abstract: Analysts of regional growth differences in the US tend to assume full spatial equilibrium (Glaeser et al, 1995). Flows of people thus indicate changes in the distribution of spatial welfare more effectively than differences in incomes. Research in Europe, however, shows that people tend to be immobile. Even mobility within countries is restricted compared to the US but national boundaries offer particular barriers to spatial adjustment. Thus it is less reasonable to assume full spatial equilibrium in a European context and differences in per capita incomes may persist and signal real spatial welfare differences. Furthermore, it implies that the drivers of what population movement there is, may differ from the drivers of spatial differences in productivity or output growth. This paper analyses the drivers of differential urban growth in the EU both in terms of population and output growth. The results show significant differences in the drivers as well as common ones. They also reveal the extent to which national borders still impede spatial adjustment in Europe. This has important implications for policy and may apply more generally to countries – for example China - less homogeneous than the USA.
    Date: 2010–01
  6. By: Wouter Jacobs; Theo Notteboom
    Abstract: How do seaports evolve in relation to each other? Recent studies in port economics and transport geography focused on how supply chain integration has structurally changed the competitive landscape in which individual ports and port actors operate. Port regionalization has been addressed as the corresponding new phase in the spatial and functional evolution of port systems. However, these studies lack theoretical foundations that allow us to empirically assess both the role of the institutional context and of strategic agency in the competitive (spatial and functional) evolution of regional (integrated) port systems. The paper presents a theoretical framework to analyze and understand the co- evolution of seaports in a regional context by making use of the concept of windows of opportunity. The empirical part will unravel the role of seaport-based co-evolution in the processes aimed at positioning market players and ports on the container scene in the Rhine-Scheldt Delta.
    Keywords: co-evolution, seaports, regionalization, institutions, economic geography
    JEL: O18 O30 R11 R40
    Date: 2010–02
  7. By: Rikard Eriksson
    Abstract: By means of a unique longitudinal database with information on all plants and employees in the Swedish economy, this paper analyzes how geographical proximity influences the impact of spillovers and knowledge flows on the productivity growth of plants. Concerning the effects of spillovers, we show that the density of economic activities as such mainly contributes to plant performance within a very short distance and that the composition of economic activities is more influential further away. Regarding the influence of local industrial setup, proximity increases the need to be located near different, but related, industries whereas increased distance implies a greater effect of intra-industry spillovers. The analyses also demonstrate that knowledge flows via the mobility of skilled labor is primarily a sub-regional phenomenon. Only inflows of skills that are related to the existing knowledge base of plants and come from less than 50 kilometers away have a positive effect on plant performance. Concerning outflows of skills, the results indicate that it is less harmful for a dispatching plant if a former employee remains within the local economy as compared to leaving for a job in another part of the national economy.
    Keywords: agglomeration economies, knowledge spillovers, labor mobility, plant performance, geographical proximity, related variety
    JEL: R11 Q12 O18
    Date: 2010–03
  8. By: Alexiadis, Stilianos; Tomkins, Judith
    Abstract: Although the importance of technology adoption has been acknowledged, nevertheless, at a more general level, a critical question arises: how do the overall infrastructure conditions affect the absorptive ability of a regional economy? This question can be stated alternatively as: what are the implications of a ‘poor’ or a ‘superior’ infrastructure for regional convergence? It is possible to provide some answers to these questions by constructing a model of regional convergence that encapsulates the impact of infrastructure in the absorptive ability of a regional economy. In this model the possibility that high technological gaps might act as obstacles to convergence is taken explicitly into consideration. The model developed in this paper indicates that convergence towards leading regions is feasible only for regions with sufficient absorptive capacity, which is assumed to be a function of infrastructure conditions in a regional economy. The model is tested using data for the NUTS-2 regions of the EU-27 during the time period 1995-2006. The results suggest that adoption of technology has a significant effect on regional growth patterns in Europe.
    Keywords: Convergence-club; Technological Gap; European Regions
    JEL: O18 C21 R11
    Date: 2010–03–03
  9. By: CAVAILHES, Jean (NRA, UMR 1041, CESAER, Dijon, France); FRANKHAUSER, Pierre (CNRS, ThŽMA, UniversitŽ de Franche-ComtŽ, Besanon, France); PEETERS, Dominique (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE) and Department of Geography); THOMAS, Isabelle (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE) and Department of Geography)
    Keywords: peri-urban, residential localisation, fractal geometry, amenities
    JEL: R12 R21
    Date: 2009–07–01
  10. By: Junichi Nishimura; Hiroyuki Okamuro
    Abstract: Industrial clusters have attracted increasing attention as important locations of innovation. Therefore, several countries have started promotion policies for industrial clusters. However, there are few empirical studies on cluster policies. This paper examines the effects of the “Industrial Cluster Project” (ICP) in Japan on the R&D productivity of participants, using a unique dataset of 229 small firms, and discusses the conditions necessary for the effective organization of cluster policies. Different from former policy approaches, the ICP aims at building collaborative networks between universities and industries and supports the autonomous development of existing regional industries without direct intervention in the clustering process. Thus far, the ICP is similar to indirect support systems adopted by successful European clusters. Our estimation results suggest that participation in the cluster project alone does not affect R&D productivity. Moreover, research collaboration with a partner in the same cluster region decreases R&D productivity both in terms of the quantity and quality of patents. Therefore, in order to improve the R&D efficiency of local firms, it is also important to construct wide-range collaborative networks within and beyond the clusters, although most clusters focus on the network at a narrowly defined local level. However, cluster participants apply for more patents than others without reducing patent quality when they collaborate with national universities in the same cluster region.
    Keywords: Industrial cluster; University-industry partnership; Small and medium enterprise; R&D; Patent
    JEL: O23 O32 O38 R38
    Date: 2010
  11. By: Yvonne Schindele (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: Since the beginning of the transformation of East Germany from a socialist planned economy to a market economy, there has been an ambitious political goal of fostering entrepreneurial activity in that part of the country. One of the most-hoped for results of this undertaking is the anticipated contribution of small and new firms to solving the economic, social, and political problems of East Germany, thereby narrowing the gap between East and West Germany. This paper uses panel data from 1992 to 2005 on 97 German regions to analyze recent convergence in self-employment rates. An astonishing catching-up process is observed for East German regions during the period under study. However, the general convergence between East and West Germany observed during the first years after reunification has not been maintained. In short, some East German regions have achieved convergence with West German self-employment rates and some have not.
    Keywords: Entrepreneurship, regional convergence, self-employment, regional devel- opment, transition, Germany
    JEL: L26 M13 O1 O18 O47 R11
    Date: 2010–03–17
  12. By: Francesca Masciarelli; Keld Laursen; Andrea Prencipe
    Abstract: Drawing on social capital theory and international business literature, we argue that firms’ home region social capital increases the degree of firms’ internationalization for both goods and knowledge. Beyond a certain level of social capital, however, firms become over-embedded in their home region social relationships so that the degree of internationalization decreases. We also conjecture that firms’ investment in research and development moderates the relationship between home region social capital and the degree of internationalization for goods and knowledge in a positive fashion. Combining data on social capital at the level of 21 regions with a large-scale data set on internationalization activities by a representative sample of around 2000 Italian manufacturing firms, we find—after controlling for a large set of firm and regional characteristics—overall support for our theoretical arguments.
    Keywords: Regional social capital; Internationalization; Research and development; over-embeddedness
    Date: 2010
  13. By: Joan Crespo
    Abstract: The widely studied concept of clusters has been usually treated as pre-established and successful structures. We argue that clusters are not pre-established but emerge through a double competition process of technological and regional nature. Moreover, faced to a changing environment they are not always successful. Their long-term evolution depends on their viability capacities. We show that viability is dependent on the emergence conditions, because different forms of emergence create clusters with different structures.
    Keywords: cluster life cycle, emergence, viability, networks
    JEL: R12 O31 D85
    Date: 2010–01
  14. By: Kumagai, Narimasa
    Abstract: In Japan, economic stagnation due to the lack of aggregate demand has hit the regional health insurance system and this affects most retired pensioners. The fiscal state of insurers in rural areas deteriorated. This paper aims to investigate whether the regional disparities in medical levies per household make a contribution to income-related geographic inequalities in health care financing. Data of the central two regions of the Japanese National Health Insurance in 2005 were extracted. Their share of population was about 41.5 percent. Retired employees and self-employed individuals are covered by this insurance system. We conducted the geographic decomposition using the concentration index. The within-area inequality in medical levies mainly accounted for geographic inequality in medical levies per household. The hypothesis that there was no between-area inequality in medical levies was not rejected. We revealed the differences in the within-area inequality in medical levies in the central Kanto. This means such proportionality was not built into the NHI system through near constant contribution rates across the distribution of living standards. It can be considered that the differences in the within-area inequality were caused by the inequality in income per household and the multiplier of income levies. We found that income per household, the standard land price of residential districts and the size of an insurer are major determinants of the multiplier of income levies. The higher land price tends to greater the multiplier of income levies. The expansion of insurer's size increases the multiplier of income levies in most of districts. The inequality in the multiplier of income levies will reduce if local governments raise per-household levy in proportion to the size of an insurer and lower the multiplier of income levy.
    Keywords: Decomposition, Inequality, Japan, Medical Levies, National Health Insurance
    Date: 2010–02
  15. By: Berliant, Marcus; Kung, Fan-chin
    Abstract: The empirical literature has found evidence of locational sorting of workers by wage or skill. We show that such sorting can be driven by asymmetric information in the labor market, specifically when firms do not know if a particular worker is of high or low skill. In a model with two types and two regions, workers of different skill levels are offered separating contracts in equilibrium. When mobile low skill worker population rises or there is technological change that favors high skilled workers, integration of both types of workers in the same region at equilibrium becomes unstable, whereas sorting of worker types into different regions in equilibrium remains stable. The instability of integrated equilibria results from firms, in the region to which workers are perturbed, offering attractive contracts to low skill workers when there is a mixture of workers in the region of origin.
    Keywords: Adverse Selection; Stratification
    JEL: R13 D82 R12
    Date: 2010–03–12
  16. By: Pholo Bala, Alain (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Keywords: economic geography, urban primacy, hub, developing countries
    JEL: D58 F12 F15 R12
    Date: 2009–05–01
  17. By: VANDENBULCKE, GrŽgory (UniversitŽ catholique de Louvain, CORE and Department of Geography, B-1348 Louvain-la-Neuve, Belgium); DUJARDIN, Claire (UniversitŽ catholique de Louvain, CORE and FRS-FNRS, B-1348 Louvain-la-Neuve, Belgium); THOMAS, Isabelle (UniversitŽ catholique de Louvain, CORE and FRS-FNRS, B-1348 Louvain-la-Neuve, Belgium); DE GEUS, Bas (Department of Human Psychology and Sports Medicine, Vrije Universiteit Brussel, B-1050 Brussels, Belgium)
    Abstract: This paper attempts to explain the spatial variation of the use of a bicycle for commuting to work at the level of the 589 municipalities in Belgium. Regression techniques were used and special attention was paid to autocorrelation, heterogeneity and multicollinearity. Spatial lag models were used to correct for the presence of spatial dependence and a disaggregated modelling strategy was adopted for the northern and southern parts of the country. The results show that much of the inter-municipality variation in bicycle use is related to environmental aspects such as the relief, traffic volumes and cycling accidents. Town size, distance travelled and demographic aspects also have some effect. In addition, there are regional differences in the effects of the structural covariates on bicycle use: the impact of variables such as traffic volume and cycling accidents differs substantially between the north and the south of the country. This paper also suggests that high rates of bicycle use in one municipality stimulate cycling in neighbouring municipalities, and hence that a mass effect can be initiated, i.e. more cycle commuting encourages even more commuters in the area to cycle. These findings provide some recommendations for decision-makers wishing to promote a shift from car to bicycle use
    Keywords: cycling, commuting, spatial lag model, spatial regime, pro-cycling strategies
    Date: 2009–11–01
  18. By: DUJARDIN, Claire (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); PEETERS, Dominique (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); THOMAS, Isabelle (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Abstract: A recent body of research suggests that the spatial structure of cities might influence the socioeconomic characteristics and outcomes of their residents. In particular, the literature on neighbourhood effects emphasizes the potential influence of the socioeconomic composition of neighbourhoods in shaping individualÕs behaviours and outcomes, through social networks, peer influences or socialization effects. However, empirical work still has not reached a consensus regarding the existence and magnitude of such effects. This is mainly because the study of neighbourhood effects raises important methodological concerns that have not often been taken into account. Notably, as individuals with similar socio-economic characteristics tend to sort themselves into certain parts of the city, the estimation of neighbourhood effects raises the issue of location choice endogeneity. Indeed, it is difficult to distinguish between neighbourhood effects and correlated effects, i.e. similarities in behaviours and outcomes arising from individuals having similar characteristics. This problem, if not dequately corrected for, may yield biased results. In the first part of this paper, neighbourhood effects are defined and some methodological problems involved in measuring such effects are identified. Particular attention is paid to the endogeneity issue, giving a formal definition of the problem and reviewing the main methods that have been used in the literature to try to solve it. The second part is devoted to an empirical illustration of the study of neighbourhood effects, in the case of labour-market outcomes of young adults in Brussels. The effect of living in a deprived neighbourhood on the unemployment probability of young adults residing in Brussels is estimated using logistic regressions. The endogeneity of neighbourhood is addressed by restricting the sample to young adults residing with their parents. Then, a ensitivity analysis is used to assess the robustness of the results to the presence of both observed and unobserved parental covariates.
    Keywords: neighbourhood effects, endogeneity, self-selection, sensitivity analysis, Brussels
    JEL: R0 J6 C1
    Date: 2009–09–01
  19. By: Fan, Shenggen; Kanbur, Ravi; Zhang, Xiaobo
    Keywords: International Development, International Relations/Trade,
    Date: 2010–01–28
  20. By: PIERETTI, Patrice; ZANAJ, Skerdilajda (UniversitŽ catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))
    Keywords: tax competition, public goods competition, spatial competition, foreign direct investments, country size
    JEL: H25 H73 F13 F15 F22
    Date: 2009–03–01
  21. By: DUJARDIN, Claire (UniversitŽ catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); GOFFETTE-NAGOT, Florence (UniversitŽ de Lyon, F-69003 Lyon, France; CNRS, GATE, UMR 5824, Ecully, F-69130, France)
    Abstract: The aim of this paper is to test for the influence of neighborhood deprivation on individual unemployment probability in the case of Lyon (France). We estimate a bivariate probit model of unemployment and location in a deprived neighborhood. Our identification strategy is twofold. First, we instrument neighborhood type by the gender composition of householdÕs children and the spouseÕs workplace. Second, we use the methodology proposed by Altonji et al. (2005), that in our case consists in making hypotheses as to the correlation between the unobservables that determine unemployment and the unobservables that influence the selection into neighborhood types. Our results show that the effect of neighborhood deprivation is not significantly different from zero in the bivariate probit with exclusion restrictions. We also show that a correlation of the unobservables as low as ten percent of the correlation of observables is sufficient to explain the positive neighborhood effect that is observed when endogeneity is not accounted for.
    Keywords: neighborhood effects, unemployment, simultaneous probit models, instrumental variables, selection on unobservables
    JEL: R2 I32
    Date: 2009–12–01

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