nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒10‒30
eleven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Related variety and regional growth in Spain By Ron Boschma; Asier Minondo; Mikel Navarro
  2. An investigation of the relation between cooperation and the innovative success of German regions By Tom Broekel; Matthias Buerger; Thomas Brenner
  3. Testing Urbanization Economies in Manufacturing Industries: Urban Diversity or Urban Size? By Shihe Fu; Junjie Hong
  4. "Racial Preferences in a Small Urban Housing Market: A Spatial Econometric Analysis of Microneighborhoods in Kingston, New York" By Sanjaya DeSilva; Anh Pham; Michael Smith
  5. Network Dependency in Migration Flows – A Space-time Analysis for Germany since Re-unification By Timo Mitze
  7. Limits to Growth: Tourism and Regional Labor Migration By Denise Eby Konan
  8. Borders, market access and urban growth; the case of Saxon towns and the Zollverein By Florian Ploeckl
  9. Uneven landscapes and the city size distribution By Sanghoon Lee; Qiang Li
  11. Urban sprawl and municipal budgets in Spain: a dynamic panel data analysis By Miriam Hortas-Rico

  1. By: Ron Boschma; Asier Minondo; Mikel Navarro
    Abstract: This paper investigates whether related variety, among other types of spatial externalities, affected regional growth in Spain at the NUTS 3 level during the period 1995-2007. We found evidence that related variety matters for growth across regions, especially when measured with the assistance of the Porter's cluster classification and the proximity index proposed by Hidalgo et al.. That is, Spanish provinces with a range of industries that are technologically related tend to show higher economic growth rates, controlling for the usual suspects. We did not find, however, any evidence of regional growth effects that come from technologically related sectors imports.
    Keywords: technological relatedness, related variety, regional branching, regional diversification
    JEL: R11 O14 N94
    Date: 2010–10
  2. By: Tom Broekel; Matthias Buerger; Thomas Brenner
    Abstract: Concepts like regional innovation systems, innovative milieu, and learning regions emphasize the positive contribution of intra-regional cooperation to firmsÕ innovation performance. Despite substantial numbers of case studies, the quantitative empirical evidence for this claim is thin. Using data on the co-application and co- invention of patents for 270 German labor market regions the study shows that intra- regional cooperation intensity and regional innovation efficiency are associated. In contrast to the negative influence of inter-regional cooperation, medium levels of intra-regional cooperation stimulate regional innovation efficiency.
    Keywords: regional innovation efficiency, cooperation intensity, collaboration, regional cooperation
    JEL: O18 R11 O31
    Date: 2010–10
  3. By: Shihe Fu; Junjie Hong
    Abstract: Whether urbanization economies stem from urban diversity or urban scale is not clear in the literature. This paper uses the 2004 China manufacturing census data and tests simultaneously the effects of urban size and industrial diversity on firm productivity, controlling for localization economies and human capital externalities. We find that productivity increases with city size—but at a diminishing rate, and the city size effect becomes negative for cities with population over two million. Firms also benefit from industrial diversity, and the strength of such benefit increases with city size but decreases with firm size. The characteristics of agglomeration economies in a transition economy are also discussed.
    Keywords: Urbanization economies; Industrial diversity; Jacobs externalities; City size.
    JEL: L60 R12 R30
    Date: 2010–10–18
  4. By: Sanjaya DeSilva; Anh Pham; Michael Smith
    Abstract: This paper use spatial econometric models to test for racial preferences in a small urban housing market. Identifying racial preferences is difficult when unobserved neighborhood amenities vary systematically with racial composition. We adopt three strategies to redress this problem: (1) we focus on housing price differences across microneighborhoods in the small and relatively homogenous city of Kingston, New York; (2) we introduce GIS-based spatial amenity variables as controls in the hedonic regressions; and (3) we use spatial error and lag models to explicitly account for the spatial dependence of unobserved neighborhood amenities. Our simple OLS estimates agree with the consensus in the literature that black neighborhoods have lower housing prices. However, racial price discounts are no longer significant when we account for the spatial dependence of errors. Our results suggest that price discounts in black neighborhoods are caused not by racial preferences but by the demand for amenities that are typically not found in black neighborhoods.
    Keywords: Housing; Race; Neighborhood Amenities; Spatial Econometrics Commonwealth of Independent States
    JEL: J15 R21
    Date: 2010–05
  5. By: Timo Mitze
    Abstract: The contribution of this paper is to analyse the role of network interdependencies in a dynamic panel data model for German internal migration fl ows since re-unification. So far, a capacious account of spatial patterns in German migration data is still missing in the empirical literature. In the context of this paper, network dependencies are associated with correlations of migration flows strictly attributable to proximate flows in geographic space. Using the neoclassical migration model, we start from its aspatial specification and show by means of residual testing that network dependency eff ects are highly present. We then construct spatial weighting matrices for our system of interregional flow data and apply spatial regression techniques to properly handle the underlying space-time interrelations. Besides spatial extensions to the Blundell-Bond (1998) system GMM estimator in form of the commonly known spatial lag and unconstrained spatial Durbin model, we also apply system GMM to spatially filtered variables. Finally, combining both approaches to a mixed spatial filteringregression specification shows a remarkably good performance in terms of capturing spatial dependence in our migration equation and at the same time qualify the model to pass essential IV diagnostic tests. The basic message for future research is that space-time dynamics is highly relevant for modelling German internal migration flows.
    Keywords: Internal migration, dynamic panel data; Spatial Durbin Model; GMM
    JEL: R23 C31 C33
    Date: 2010–09
  6. By: Judith K. Hellerstein (Department of Economics and MPRC,University of Maryland); Melissa P. McInerney (Department of Economics, College of William and Mary); David Neumark (Department of Economics, UCI, NBER, and IZA)
    Abstract: We study the relationship between Hispanic employment and location-specific measures of the distribution of jobs. We find that it is only the local density of jobs held by Hispanics that matters for Hispanic employment, that measures of local job density defined for Hispanic poor English speakers or immigrants are more important, and that the density of jobs held by Hispanic poor English speakers are most important for the employment of these less-skilled Hispanics than for other Hispanics. This evidence is consistent with labor market networks being an important influence on the employment of less-skilled Hispanics, as is evidence from other sources. We also find that in MSAs where the growth rates of the Hispanic immigrant population have been highest, which are also MSAs with historically low Hispanic populations, localized job density for low-skilled jobs is even more important for Hispanic employment than in the full sample. We interpret this evidence as consistent with the importance of labor market networks, as strong labor market networks are likely to have been especially important in inducing Hispanics to migrate, and because of these networks employment in these “new immigrant” cities is especially strongly tied to the local availability of jobs.
    Keywords: spatial mismatch, networks, immigration, Hispanics
    JEL: J15 J61 R23
    Date: 2010–10–18
  7. By: Denise Eby Konan (Department of Economics, University of Hawaii Research Organization, Center for Sustainable Coastal Tourism)
    Abstract: The paper provides a methodology for considering the carrying capacity and limits to growth of a labor-constrained mature tourism destination. A computable general equilibrium model is used to examine the impacts of visitor expenditure growth and labor migration on HawaiÔiÕs economy. Impacts on regional income, welfare, prices, sector-level output, and gross state product are considered under alternative migration scenarios. Labor market constraints impose limits to growth in real visitor expenditures. Labor market growth with constrained visitor demand generates falling per capita household welfare.
    Keywords: Computable general equilibrium model, tourism, migration, Hawaii
    JEL: R13 D58 O15 L83
    Date: 2010–06
  8. By: Florian Ploeckl (University of Oxford)
    Abstract: The Zollverein, the 1834 customs union between independent German states, removed all internal borders. This paper investigates its economic impact focussing on urban population growth in the state of Saxony. Implications from a economic geography model are tested with a data set on town populations and location characteristics as well as an improved distance measure created with GIS techniques to include geography and infrastructure. Saxony's Zollverein membership led to significantly higher growth for towns close to the liberalized border. The effect depended on a town's size, was reinforced through neighboring markets and worked through influencing migration and natural increase.
    Keywords: Economic geography, market access, customs union, GIS
    JEL: N93 F15 R12 R23
    Date: 2010
  9. By: Sanghoon Lee (University of British Columbia); Qiang Li (Shanghai University of Finance and Economics)
    Abstract: This paper proposes a new explanation for Zipf’s law often observed in the top tail of city size distribution. We show that Zipf’s law can emerge if city size can be expressed as a product of multiple random factors. Each of the factors need not generate Zipf’s law by itself. The key implication is that we cannot reject a model simply because the model does not generate Zipf’s law. A single model, typically representing only one factor, may not generate Zipf’s law, but if we have many such models together as in reality, Zipf’s law may emerge.
    Keywords: City size distribution, Zipf’s law, rank-size rule, log-normal distribution
    JEL: D39 R12
    Date: 2010
  10. By: Judith K. Hellerstein (Department of Economics and MPRC,University of Maryland); Melissa P. McInerney (Department of Economics, College of William and Mary); David Neumark (Department of Economics, UCI, NBER, and IZA)
    Abstract: We specify and implement a test for the presence and importance of labor market network based on residential proximity in determining the establishments at which people work. Using matched employeremployee data at the establishment level, we measure the importance of these network effects for groups broken out by race, ethnicity, and various measures of skill. The evidence indicates that these types of labor market networks do exist and play an important role in determining the establishments where workers work, that they are more important for minorities and the less-skilled, especially among Hispanics, and that these networks appear to be race-based.
    Date: 2010–10–18
  11. By: Miriam Hortas-Rico (Universidad Complutense de Madrid & IEB)
    Abstract: Urban sprawl has recently become a matter of concern throughout Europe, but it is in southern countries where its environmental and economic impact has been most severe. This low-density, spatially expansive urban development pattern can have a highly marked impact on municipal budgets. Thus, local governments may see sprawl as a potential source of finance, in terms of building-associated revenues and increased transfers from upper tiers of government. At the same time, sprawl leads to increased levels of expenditure, as it may raise the provision costs of certain local public goods and requires greater investment in extending basic infrastructure for new urban development. What, therefore, is the net fiscal impact of urban sprawl? Do local governments consider the long-run net fiscal impact of new urban growth or do they simply focus on its short-term benefits, ignoring future development costs? This paper addresses these questions by analysing the dynamic relationship between urban sprawl and local budget variables. To do so, we estimate a panel vector autoregressive model using data for 4,000 Spanish municipalities for the period 1994-2005. Computed Generalised Impulse Response Functions show: (i) that sprawl considerably increases demand for new infrastructure, (ii) that the capital deficit generated by this new infrastructure is covered in the main by intergovernmental transfers and, to a lesser extent, by revenues linked to the real estate cycle, and (iii) that sprawl leads to a short-term current surplus, as the increase in current revenues offsets the increase in current expenditures due to public service provision for new developments. Overall, these findings point to a moral hazard problem for local governments in which inordinate intergovernmental transfers and development revenues encourage excessive urban sprawl.
    Keywords: Urban sprawl, local public finance, dynamic panel data
    JEL: H1 H72 R51
    Date: 2010

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