nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒06‒18
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Explaining Regional Variation in Equilibrium Real Estate Prices and Income By Oliver Bischoff
  2. Knowledge diffusion and innovation policies within the European regions: Challenges based on recent empirical evidence By Corinne Autant-Bernard; Muriel Fadairo; Nadine Massard
  3. Economic Benefits and Drawbacks of Cities and their Growth Implications By Tisdell, Clem
  4. Agglomeration processes in aging societies By Theresa Grafeneder-Weissteiner; Klaus Prettner
  5. Relative house price dynamics across euro area and US cities: convergence or divergence? By Paul Hiebert; Moreno Roma
  6. Getting people out of unemployment: A spatial perspective across Auckland By Don J. Webber; Gail Pacheco
  7. Re-defining the Boundaries of Major Italian Cities By Antonio G. CALAFATI; Paolo VENERI
  8. Labor Market Segmentation in Colombia using Stochastic Markov Chains By Jhon James Mora
  9. How do Clusters/Pipelines and Core/Periphery Structures Work Together in Knowledge Processes? By Pierre-Alexandre Balland; Raphael Suire; Jerome Vicente
  10. The Location Choices of Foreign Investors: A District-level Analysis in India By Megha Mukim; Peter Nunnenkamp
  12. Regional Input-Output Tables and the FLQ Formula: A Case Study of Finland By Tony Flegg; T. Tohmo

  1. By: Oliver Bischoff (Chair for Economic Policy, University of Hamburg)
    Abstract: We combine the real estate model of Potepan (1996) with the spatial equilibrium approach of Roback (1982) to prove the interdependency of housing prices, rental prices, building land prices and income via one simultaneous equilibrium analysis. Using unique cross-sectional data on the majority of German counties and cities for 2005, we estimate the equations in their structural and reduced form. The results show significantly positive interaction effects of income and real estate prices. Moreover, we can confirm model predictions concerning the majority of exogenous determinants. In particular, expectations about population development seem to be among the most important determinants of price and income disparities between regions in the long term.
    Keywords: Regional Housing Markets; Spatial Equilibrium Analysis; Simultaneous Equation; Germany
    JEL: C21 C31 R11 R13 R21 R31
    Date: 2010–06–05
  2. By: Corinne Autant-Bernard (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; Université de Saint-Etienne, Jean Monnet, F-42023 Saint Etienne, France); Muriel Fadairo (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; Université de Saint-Etienne, Jean Monnet, F-42023 Saint Etienne, France); Nadine Massard (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; Université de Saint-Etienne, Jean Monnet, F-42023 Saint Etienne, France)
    Abstract: This article builds upon empirical results concerning localised knowledge spillovers to highlight some policy implications within European regions. The analysis emphasises the role of regional innovation policies in supporting the institutions that generate knowledge and learning. However, the variety of regional features presented in the empirical literature suggests that the search for universal policy tools is unrealistic. From this perspective, we argue that original strategies must be generated to cope with the various dilemmas faced by regional innovation policies. Such specific strategies require accurate knowledge of local features. Improving data and indicators to diagnose and monitor regional innovation is therefore presented as a key issue for policy makers.
    Keywords: innovation policy, localised knowledge flows, European regions, knowledge-based economy
    JEL: O38 C12
    Date: 2010
  3. By: Tisdell, Clem
    Abstract: Recent trends in the growth of cities particularly in developing countries (and especially in India and China) are identified. Beneficial and negative sharing mechanisms influencing the growth of cities are examined. Economic benefits of agglomeration arise not so much from the type of economic goods available in a city location (such as common property or local public goods) but from the enhanced operation of processes of economic exchange. Two theoretical implications of the growth of cities are considered, namely: (1) city growth results in growing inequality of income and wealth within the city and (2) a city will expand beyond its optimal size. Nevertheless, the growth of cities is linked with increased levels of per capita income nationally. Worldwide growth of cities is connected with increasing globalization and with rising income inequality.
    Keywords: agglomeration economies, China, city-sizes, common property, economic growth, globalization, income distribution, India, open-access resources, quasi-public goods, spillovers, Community/Rural/Urban Development,
    Date: 2009–09
  4. By: Theresa Grafeneder-Weissteiner (Department of Economics, Vienna University of Economics & B.A.); Klaus Prettner (Vienna Institute of Demography, Austrian Academy of Sciences)
    Abstract: This article investigates agglomeration processes in aging societies by introducing an overlapping generation structure into a New Economic Geography model. Whether higher economic integration leads to spatial concentration of economic activity crucially hinges on the economies' demographic properties. While population aging as represented by declining birth rates strengthens agglomeration processes, declining mortality rates weaken them. This is due to the fact that we allow for nonconstant population size. In particular, we show that population growth acts as an important dispersion force that augments the distributional effects on agglomeration processes resulting from the turnover of generations.
    JEL: R12 J10 F15 C61
    Date: 2010–06
  5. By: Paul Hiebert (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Moreno Roma (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: This paper examines the time varying dispersion in city house price levels across the four biggest euro area countries compared with those in the United States. Using available city-level data over the period 1987-2008, it tests for price convergence and analyses key factors explaining price differentials in a panel regression framework including per capita income, population and relative distances. Results indicate limited evidence of convergence in city-level house prices despite synchronised cycles in the national aggregates for most countries since the 1990s. There is an important role for income differentials in explaining city-level house price dispersion in Germany, France, and the US (but not in Italy or Spain once unobserved city factors are taken into account). At the same time, population differences across cities play a role, though this appears to be associated with amenities specific to a particular location. In general, there has been a lower dispersion of city-level house prices in the four largest euro area economies compared with the US in conjunction with a lower estimated income elasticity for house price differentials. The results, particularly for income, appear to be robust to restricting the analysis to large urban centres. JEL Classification: R21, R31, E31.
    Keywords: House price convergence, house price dispersion, house price drivers, panel data analysis.
    Date: 2010–06
  6. By: Don J. Webber (Department of Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Gail Pacheco (Department of Economics, Auckland University of Technology, Auckland, New Zealand.)
    Abstract: Reducing the unemployment rate is an aim of most governing authorities. This paper presents a socio-economic analysis of area-level employment rate changes across Auckland using Census area-level data for the time period 1996 to 2006. Exploratory spatial data analyses suggest the presence of strong spatial patterns in intra-city employment rates changes. Application of seemingly unrelated regressions highlight forces, such as education, that are associated with increases in part time and full time employment relative to being unemployed.
    Keywords: Unemployment; Seemingly unrelated regressions; Queen spatial weights
    JEL: R20 E24 J21 C30
    Date: 2010–06
  7. By: Antonio G. CALAFATI (Universita' Politecnica delle Marche, Dipartimento di Economia); Paolo VENERI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The processes of spatial polarisation and territorial integration that have taken place in Italy since the 1950s have not been accompanied by corresponding institutional adaptations, generating the current huge discrepancy between the functional and political-administrative organisation of the territory. As argued in the paper, this institutional lock-in is rooted in a mistaken conceptualisation of territorial integration, which has focused on the identification of "travel-to-work areas", rather than on the formation of inter-municipal territorial systems which have the nature of cities de facto - larger and structurally different from the legal cities. The paper corroborates this thesis by focusing on the eight largest Italian cities de jure, identifying, on the basis of both functional and morphological features, the corresponding cities de facto.
    Keywords: Cities de facto, Metropolitan areas, Territorial organisation
    JEL: R11 R12 R23 R38
    Date: 2010–06
  8. By: Jhon James Mora
    Abstract: This article discusses regional labor segmentation using stochastic Markov chains. We present a formal model and derive preliminary results using the evolution of wages in Colombian urban areas. The results show that there was regional labor market segmentation in wages for university graduates during the period from 1993 to 2000, and corroborate the existence of structural changes in wages during the nineteen nineties
    Date: 2010–06–09
  9. By: Pierre-Alexandre Balland; Raphael Suire; Jerome Vicente
    Abstract: This paper contributes to the empirical identification of geographical and structural properties of innovative networks, focusing on the particular case of Global Navigation Satellite Systems (GNSS) at the European level. We show that knowledge bases of organizations and knowledge phases of the innovation process are the critical factors in determining the nature of the interplay between structural and geographical features of knowledge networks. Developing a database of R&D collaborative projects of the 5th and 6th European Framework Programs, we propose a methodology based on social network analysis. Its originality consists in starting from a bimodal network, in order to deduce two affiliation matrixes that allow us to study both the properties of the organization network and the properties of the project network. The results are discussed in the light of the mutual influence of the cognitive, structural and geographical dimensions on knowledge production and diffusion, and in the light of the knowledge drivers that give rise to the coexistence of a relational core-periphery structure with a geographical cluster and pipeline structure.
    Keywords: Economic Geography, Knowledge networks, Social network analysis, EU Framework Programs, GNSS
    JEL: O32 R12
    Date: 2010–06
  10. By: Megha Mukim; Peter Nunnenkamp
    Abstract: This paper analyzes the determinants of the location choices made by foreign investors at the district level in India to gauge the relative importance of economic geography factors, local business conditions, and the presence of previous foreign investors. We employ a discrete-choice model and Poisson regressions to control for the potential violation of the assumption of Independence of Irrelevant Alternatives. Our sample includes about 19,500 foreign investment projects approved in 447 districts from 1991-2005. We find that foreign investors strongly prefer locations where other foreign investors are. They are also attracted to industrially diverse locations and those with better infrastructure. We conclude that the concentration of FDI in a few locations could fuel regional divergence in post-reform India
    Keywords: FDI, economic geography, location choice, infrastructure
    JEL: F23 R12
    Date: 2010–06
  11. By: Marie Ferru (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: This paper attempts to elicit new explanations of the geography of collaborations by insisting on determinants generally neglected. We consider that the geography of collaborations are structured by constraints linked to the linkage of partners. The reconstruction of more than 200 histories of collaborations and an econometric treatment of these qualitative information reveal the structuring role of the modalities of linkage and differences in the geography of collaborations between science-industry vs. inter-company partnerships. Actors turn to their previous collaborations to construct their partnerships, leading to the strengthening of the existing geography of collaborations. To find a partner, they initially use mediation mechanisms or social networks. The first one favors extra-regional collaborations whereas the latter does not necessarily lead to local partnerships, depending on the precise form of social ties.
    Keywords: Socio-economic proximity, past collaborations, mediation mechanisms, social networks.
    Date: 2009–07–04
  12. By: Tony Flegg (Department of Economics, University of the West of England); T. Tohmo (School of Business and Economics, University of Jyvaskyla, Finland)
    Abstract: This paper examines the use of location quotients (LQs) in constructing regional input?output tables. Its focus is on the modified FLQ formula proposed by Flegg and Webber (1997). Using data for 20 Finnish regions, ranging in size from very small to very large, we determine appropriate values for the unknown parameter d used in this formula. We find that the FLQ yields results far superior to those from standard LQ-based formulae. Our findings should be very helpful to any regional analyst who is contemplating making use of the FLQ formula to generate an initial set of regional input?output coefficients. These coefficients could be used either as part of the RAS procedure or as the non-survey foundations of a hybrid model. We also consider possible improvements to the FLQ formula but find that the inclusion of a regional specialization term in this formula is unhelpful and that the original FLQ is just as good.
    Keywords: Regional input-output tables Finland FLQ formula Location quotients Input coefficients Multipliers Hybrid models
    JEL: C67 O18 R15
    Date: 2010–05

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