nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒12‒11
eleven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Productivity growth in the Old and New Europe: the role of agglomeration externalities By Emanuela Marrocu; Raffaele Paci; Stefano Usai
  2. The varieties of regional change By Edward L. Glaeser; Giacomo Ponzetto; Kristina Tobio
  3. Spatial social-networking externality and firm location: a simulation model of Chile By Marcelo Lufin; Daisuke Nakamura
  4. The Regional Distribution of Skill Premia in Urban China By John Whalley; Chunbing Xing
  5. Economic Implications of Long Distance Commuting in the Chilean Mining Industry By Patricio Aroca; Miguel Atienza
  6. Local human capital, segregation by skill, and skill-specific employment growth By Schlitte, Friso
  7. Club-Convergence and Polarisation of States: A Nonparametric Analysis of Post-Reform India By Sabyasachi Kar; Debajit Jha; Alpana Kateja
  8. Do unemployed workers benefit from enterprise zones? The French experience By Gobillon, Laurent; Magnac, Thierry; Selod, Harris
  9. Business Survival in Portuguese Regions By Alcina Nunes; Elsa de Morais Sarmento
  10. Isolating changes in net residential segregation from the effect of demographic factors in the U.S., 1989-2005. By Mora, Ricardo; Ruiz-Castillo, Javier
  11. The Gravity Model By James E. Anderson

  1. By: Emanuela Marrocu; Raffaele Paci; Stefano Usai
    Abstract: The recent history of the European Union is characterized by a dual picture showing the Old and the New countries in sharp contrast with respect to several economic dimensions. In particular, regions and industries in Eastern countries have shown an excellent performance whilst Western countries have kept moving on a rather slow track. Our aim is to assess the intertwined performance of regions and industries in New and Old economies within Europe by investigating the dynamics of total factor productivity over the period 1996-2007 and the role played by local externalities in the agglomeration process of economic activities. Among the determinants of local industry growth we analyse the agglomeration externalities and, in particular, we focus on the different impact of the specialisation and diversity externalities. Moreover, we analyse the potential influence of regional intangible assets such as human and technological capital while controlling for other territorial features which may affect the efficiency of the local industry. The empirical analysis makes use of spatial econometric techniques to take into account the possibility of cross-border externalities.
    Keywords: Agglomeration externalities; Local industry growth; Total Factor Productivity; Spatial models; European regional cohesion
    JEL: C31 O47 R31
    Date: 2010
  2. By: Edward L. Glaeser; Giacomo Ponzetto; Kristina Tobio
    Abstract: Many metropolitan areas have experienced extreme boom-bust cycles over the past century. Some places, like Detroit, grew enormously as industrial powerhouses and then declined, while other older cities, like Boston, seem quite resilient. Education does a reasonable job of explaining urban resilience. In this paper, we present a simple model where education increases the level of entrepreneurship. In this model, human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We decompose empirically the causes of the connection between skills and urban success and find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession.
    Date: 2010–06
  3. By: Marcelo Lufin (Department of Economics, Universidad Católica del Norte); Daisuke Nakamura (Department of Economics, Universidad Católica del Norte)
    Abstract: There have already been several established approaches regarding social externalities and location decision-making of the firm. However, those usually face certain difficulties when the model is applied to the real economic system. This technical problem may be solved by testing the case of spatial structure of Chile, where particular spatial configurations characterized by extremely narrow and long geographical attributes are available. While there are various methods of investigation such as spatial econometrics and CGE models, we attempt to compose a spatial Keiretsu framework by applying numeric simulation analysis. To be precise, the simulation initially distributes firms at random across whole regions of the country in order to observe the evolution process of every individual firm together with given conditions of spatially-constrained external economies of scale, scope and complexity in each region. It is then examined the potential impact of changes in internal economies such as horizontal, lateral and vertical integrations on the efficiency of further growth with respect to expansion time and scale of firms in addition to given availability of external economies. Furthermore, sensitivity of simulation is measured to evaluate the creation of new firms as well as their evolution processes by means of repeating Monte-Carlo method. The simulation outcome may provide policy implications such as the accumulating issue of severe spatial concentration in the Metropolitan Region of the country. Finally, the analysis explores further avenues of research towards general framework of spatial social externalities
    Keywords: Firm location, social network externalities, simulation model, internal and external economies
    JEL: C51 D85 L14 O15
    Date: 2010–11
  4. By: John Whalley; Chunbing Xing
    Abstract: We document and discuss the implications of a sharp increase in the regional dispersion of skill premia in China in recent years. This has previously been little noted or discussed. We use three urban household surveys for 1995, 2002, and 2007 and estimate skill premia at provincial and city levels. Results show an increase in the skill premium across all regions between 1995 and 2002, but only coastal regions show significant increases in skill premia between 2002 and 2007. For 2007, coastal regions also have much higher within region wage inequality and this contributes more to overall urban wage inequality than within region inequality of non-coastal regions. Using a fixed effects model at city level, we find that ownership restructuring is a significant factor in driving up skill premia during the first period, and that the ongoing process of China’s integration into the global economy plays a significant and regionally concentrated role in the second period.
    JEL: J00 J01 J30 J31
    Date: 2010–12
  5. By: Patricio Aroca (Department of Economics, Universidad Católica del Norte); Miguel Atienza (Department of Economics, Universidad Católica del Norte)
    Abstract: More than 10 percent of the labor force that works in Antofagasta lives in other regions, commuting on average more than 800 kilometers in a shift system that allows working several days in a row followed by several days off. The mining industry is the main contractor of such workers and the impact of the process spreads through the rest of Chilean territory. Using an input-output approach, this paper shows that a significant amount of resources generated by the mining industries in the Region of Antofagasta goes to other regions in wages earned by commuters who have decided to work in this region but live in another. The commuting process seems to be driven by centripetal forces that support centralization, thus arguing for regional policies to promote the attractiveness of the peripheral regions.
    Keywords: Long distance commuting, Spillover by labor commuting, labor commuting impact
    Date: 2010–10
  6. By: Schlitte, Friso (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Labour markets in most highly developed countries are marked by rising levels of skill segregation in the production process and increasing inequalities in skill-specific employment prospects. Local human capital has a likely effect on skill specific productivity levels and employment growth. Furthermore, theoretical studies suggest that skill segregation might matter for the polarisation of wages and employment. There are several studies investigating the influence of the local human capital endowment on qualification-specific wages levels. However, analyses on regional employment growth by different skill levels are still scarce and empirical evidence on the effects of skill segregation on qualification-specific employment is completely lacking. This paper investigates the effects of the local skill composition and skill segregation in the production process on qualification-specific employment growth in West German regions. This study provides first evidence for negative effects of skill segregation on low-skilled employment growth. Furthermore, the results show that a large share of local high-skilled employment does not foster further regional concentration of human capital but positively affects the employment prospects of less skilled workers." (author's abstract, IAB-Doku) ((en))
    Keywords: Humankapital, lokale Ökonomie, Beschäftigungsentwicklung, Lohnhöhe, Qualifikationsniveau, Niedrigqualifizierte, Hochqualifizierte, Kompetenz, Segregation, regionaler Arbeitsmarkt, Westdeutschland, Bundesrepublik Deutschland
    JEL: R11 J21 J24
    Date: 2010–11–29
  7. By: Sabyasachi Kar; Debajit Jha; Alpana Kateja (Institute of Economic Growth)
    Abstract: The objective of this paper is to study the dynamics of the distribution of regional per capita income of Indian states in the post reform period, in order to identify trends towards convergence-club formation, polarisation or stratification during this period. We adopt the ‘distribution dynamics’ framework that uses kernel density estimates, stochastic kernels and ergodic distributions in order to identify these trends. The results show that there is polarisation in India in the post-reform period and this is due to the contrary growth dynamics of the middle income states resulting in the ‘vanishing middle’ of the relative income distribution. Since polarisation increases the possibility of conflict, this study highlights one of the undesirable consequences of the current growth process in India.
    Keywords: Distribution Dynamics, Regional Convergence, Nonparametric estimation, Polarisation, India
    JEL: C14 O18 O53 R11
    Date: 2010
  8. By: Gobillon, Laurent (Institut National d'Etudes Démographiques, PSE and CREST); Magnac, Thierry (Toulouse School of Economics, Université de Toulouse (Gremaq & Idei)); Selod, Harris (The World Bank, Paris School of Economics and CREST)
    Abstract: This paper is a statistical evaluation of the 1997 enterprise zone program in France. We investigate whether the program increased the pace at which unemployed workers residing in targeted municipalities and surrounding areas find employment. The work relies on a two- stage analysis of unemployment spells drawn from an exhaustive dataset over the 1993-2003 period in the Paris region. We first estimate a duration model stratified by municipalities in order to recover semester-specific municipality effects net of individual observed heterogeneity. These effects are estimated both before and after the implementation of the program, allowing us to construct variants of difference-in-difference estimators of the impact of the program at the municipality level. Following extensive robustness checks, we conclude that enterprise zones have a very small but significant e¤ect on the rate at which unemployed workers find a job. The effect remains localized and is shown to be significant only in the short run.
    Keywords: Enterprise zones, policy evaluation, unemployment, economic geography, duration models
    JEL: C21 C41 H25 J64 R23
    Date: 2010–10–25
  9. By: Alcina Nunes (Escola Superior de Tecnologia e Gestão do Instituto Politécnico de Bragança e GEMF, Faculdade Economia Universidade de Coimbra, Portugal); Elsa de Morais Sarmento (Departamento de Economia e Gestão da Universidade de Aveiro, Portugal)
    Abstract: This work addresses the post-entry performance of employer enterprises for seven regions in Portugal, at the NUT II level, by investigating the structural characteristics of survival, using non-parametric and semi-parametric methods, during the period 1985 to 2007. The last decades of the 20th century were characterized by a period of creative destruction in Portugal. In particular, regions such as Norte, Algarve and Madeira show the highest growth rates in enterprise births, deaths and firm churn. After 2000, firms´ births and deaths get relatively less turbulent. In the non-parametric analysis, we identify statistically significant disparities among regions. Norte has the lowest survival rate and Centro holds the longest surviving firms and the survival gap between the former two regions gets amplified over time. Concerning the semi-parametric analysis, firm’s current size dimension is a strong determinant for the probability of survival, particularly in the Norte and Açores. In industries characterized by high entry rates at the moment of a firm’s birth, post-entry survival becomes harder, especially in the south and in the Portuguese archipelagos, the regions with the lowest number of active employer enterprises. A higher entry rate combined with fast growth rates for any given industry also generates a shorter duration of firms. Manufacturing is the sector where more firms are more likely to abandon the market, particularly in Madeira and Norte. But it is turbulence, given by the sum of firms´ entry and exit rates that exhibits the most significant effect on survival. For every region, except for the Açores, where there is no statistical significance, those that have the highest record of firm turbulence, also display the lowest business survival probabilities. Turbulence decreases severely the survival probabilities of firms located in Madeira and Norte and to a lesser extent in the Algarve.
    Keywords: Duration Analysis, Firm dynamics, Entrepreneurship, Regional Analysis.
    JEL: C14 C41 L25 L26 R11
    Date: 2010–10
  10. By: Mora, Ricardo; Ruiz-Castillo, Javier
    Abstract: This paper investigates residential segregation trends net of changes in the racial and the neighborhood marginal population distributions. It follows two alternative strategies. First, it uses indices of two types. Indices of the first type emphasize an evenness segregation concept and are only invariant to changes in the marginal distribution by race, while those of the second type emphasize a representativeness segregation concept and are only invariant to changes in the marginal distribution by neighborhood. Second, it uses the mutual information, or the M index that is not invariant to changes in either of the marginal distributions but admits two decompositions. Each of the decompositions isolates a term which (a) is invariant to changes in the marginal distribution of one of the two variables and the entropy, or diversity, of the other, and (b) reflects changes in either an evenness or a representativeness segregation notion. According to the M index, net residential segregation in both an evenness and a representative sense considerably decreases for the U.S. public school student population in urban areas in 1989-2005. Because of their failure to control for changes in the spatial entropy, invariant indices of the first type register a smaller decline in the evenness sense, while because of their failure to control for changes in the racial entropy invariant indices of the second type register an increase in residential segregation in the representativeness sense. Within the evenness perspective, all racial groups experiment a reduction in net segregation which is greatest for Hispanics.
    Keywords: Multigroup segregation; Multilevel segregation; Residential segregation; Mutual information; Entropy indices; Invariance properties; Econometric models;
  11. By: James E. Anderson
    Abstract: The gravity model in economics was until relatively recently an intellectual orphan, unconnected to the rich family of economic theory. This review is a tale of the orphan's reunion with its heritage and the benefits that have flowed from it. Gravity has long been one of the most successful empirical models in economics. Incorporating the theoretical foundations of gravity into recent practice has led to a richer and more accurate estimation and interpretation of the spatial relations described by gravity. Recent developments are reviewed here and suggestions are made for promising future research.
    JEL: F10 R1
    Date: 2010–12

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