nep-geo New Economics Papers
on Economic Geography
Issue of 2011‒01‒30
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. A Proposal for an Alternative Spatial Weight Matrix under Consideration of the Distribution of Economic Activity? By Jens K. Perret
  2. Dwindling U.S. Internal Migration: Evidence of Spatial Equilibrium? By Mark D., Partridge; Dan S. , Rickman; M. Rose , Olfert; Kamar, Ali
  3. Regional Disparities in Europe By AMENDOLA, Adalgiso; CAROLEO, Floro Ermesto; COPPOLA, Gianluigi
  4. The Economic Transition and Growth of Philippine Regions By Mapa, Dennis S.; Sandoval, Monica Flerida B
  5. On the importance of growth spillovers and regional clustering in the Russian Federation? By Jens K. Perret
  6. Migration, urban population growth and regional disparity in China By Mary-Françoise Renard; Zelai Xu; Nong Zhu
  7. Sensitivity Analysis of SAR Estimators By Liu, Shuangzhe; Polasek, Wolfgang; Sellner, Richard
  8. Should the optimal portfolio be region-specific? A multi-region model with monetary policy and asset price co-movements By Leung, Charles Ka Yui; Teo, Wing Leong
  9. Is there a "zoo effect" in French local governments? By Quentin Frère; Hakim Hammadou; Sonia Paty
  10. Financial Reforms, Growth and Regional Disparity in Post-reform China By Zhicheng Liang
  11. Industrial Localisation and Economic Development. A Case Study By COPPOLA, Gianluigi; GAROFALO, Maria Rosaria; MAZZOTTA, Fernanda
  12. A multi-scalar analysis of European cities By Enrico Giovannetti; Francesco Pagliacci
  13. The micro processes underlying small firms'integration into territorial innovation dynamics - a knowledge based perspective By Rani Jeanne Dang; Christian Longhi; Catherine Thomas
  14. Regional Mismatch and Unemployment: Theory and Evidence from Italy, 1977-1998 By MANACORDA, Marco; PETRONGOLO, Barbara
  15. Regional heterogeneity and firms’ innovation: the role of regional factors in industrial R&D in India By Pradhan, Jaya Prakash
  16. Productivity spillovers and regional differences: some evidence on the italian manufacturing sector By IMBRIANI, Cesare; REGANATI, Filippo
  17. Distribution Dynamics of Regional GDP per Employee in Unified Germany By Sebastian Vollmer; Hajo Holzmann; Florian Ketterer; Stephan Klasen
  18. Matching Efficiency and Labour Market Reform in Italy. A Macroeconometric Assessment By DESTEFANIS, Sergio Pietro; FONSECA, Raquel
  19. Local politics and economic geography By Berliant, Marcus; Tabuchi, Takatoshi

  1. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: In economic geography all indicators and studies are based in one way or another on a measure of distances between two points of interest. The present study discusses the problems that arise in the course of calculating distances between regions. It is shown that measures presently in use are usually biased. A new measuring concept is therefore presented that takes into account the regional economic or demographic structures and constructs distances between regions accordingly.
    Keywords: Russian Federation, Spillovers, Spatial Economectrics, Spatial Weights
    JEL: R11 R15
    Date: 2011–01
  2. By: Mark D., Partridge; Dan S. , Rickman; M. Rose , Olfert; Kamar, Ali
    Abstract: This paper examines whether the significant downward shift in U.S. gross migration rates after 2000 is indicative of the economy nearing a stationary spatial equilibrium. Nearness to spatial equilibrium would imply that site-specific factors such as amenities and location within the urban hierarchy have little influence on migration because their values have been capitalized into prices, causing interregional utility levels to become approximately equal. Yet, in an examination of U.S. counties, we find empirical evidence of only a mild ebbing of natural amenity-based migration after 2000 and little slowing of population redistribution from peripheral towards core urban areas. Instead, the primary finding is a downward shift in the responsiveness of population to spatially asymmetric demand shocks post-2000, and associated increased responsiveness of local area labor supply, more consistent with European regional labor markets. Quantile regression analysis suggests that this shift does not relate to a difference in regional labor market tightness across the two decades.
    Keywords: spatial equilibrium; migration; regional growth
    JEL: R32 R23
    Date: 2010–12–27
  3. By: AMENDOLA, Adalgiso (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); CAROLEO, Floro Ermesto (Dipartimento di Studi economici - Università degli Studi di Napoli Parthenope); COPPOLA, Gianluigi (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)
    Abstract: In the last decades, and particularly in the Nineties, The European Economy has been widely characterised by regional disparities. This paper aims to evaluate if different regional economic structures, such as productive mix and labour market composition, contribute to this disparities and to what extent they prevent the convergence and/or favour divergent clusters of regions. To this purpose we shall apply a multivariate analysis method, named STATIS, to a set of regional characteristic indicators that will allow us to estimate some latent factors which are able to measure the regional differences and their dynamic.
    Keywords: european regional differences; multivariate analysis; STATIS
    JEL: J60 R11 R58
    Date: 2011–01–18
  4. By: Mapa, Dennis S.; Sandoval, Monica Flerida B
    Abstract: The paper applies the economic transition models and econometric convergence tests proposed by Phillips and Sul (2006) using data on per capita Gross Regional Domestic Product (1988-2008) to determine if 14 Philippine regional economies converge to a steady state path over a period of time. The paper explores modeling and analyzing the economic transition behavior of the regions. Regional relative transition paths are investigated to generate a graphical overview of the behavior of the regional economies. The log t convergence test, which is constructed from a transition differential decay model, is used to establish if a region converges to a steady state path or diverges from a steady state path. The test basically provides the basis for a stepwise clustering algorithm in finding convergence clusters and analyzing transition behavior between clusters. The paper identifies convergence clubs and determines divergent regional economies using a recursive procedure that revolves around the log t convergence test.
    Keywords: log t convergence test; convergence clubs
    JEL: R58 R11
    Date: 2011–01
  5. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: Regions differ from each other not only in their economic structure but concerning the impact they have on their neighbors. In the present study interregional spillover activities are analyzed for the regions of the Russian Federation. Instead of knowledge spillovers, more general growth spillovers are accounted for. The time period observed in this study is 1994 to 2008, therefore a large part of the Russian transition period. Using the local Moran's I statistic as a measure of regional spillover activity reveals that only limited spillover activity is present. Additionally, to account for the range of these spillovers, an approach introduced by Bottazzi and Peri (2003) is implemented. It is shown that the spillovers' reach is very limited if present at all.
    Keywords: Russian Federation, Spillovers, Spatial Economectrics, Clustering
    JEL: R11 R15
    Date: 2011–01
  6. By: Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Zelai Xu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Nong Zhu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The main objective of this paper is to study the determinants of city population growth in China during the 1990s', as well as the determinants of migrations towards cities, which constitutes the main source of urban population growth in this period. A second objective is to identify regional differences in the urban growth and migrations, that is, whether urban growth and migration patterns are different between coastal and inland provinces. Additionally, we are interested in the differences between temporary and permanent migrations towards urban areas.
    Keywords: cerdi
    Date: 2011–01–18
  7. By: Liu, Shuangzhe (University of Canberra, Canberra, Australia); Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sellner, Richard (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: Estimators of spatial autoregressive (SAR) models depend in a highly non-linear way on the spatial correlation parameter and least squares (LS) estimators cannot be computed in closed form. We first compare two simple LS estimators by distance and covariance properties and then we study the local sensitivity behavior of these estimators using matrix derivatives. These results allow us to calculate the Taylor approximation of the least squares estimator in the spatial autoregression (SAR) model up to the second order. Using Kantorovich inequalities, we compare the covariance structure of the two estimators and we derive efficiency comparisons by upper bounds. Finally, we demonstrate our approach by an example for GDP and employment in 239 European NUTS2 regions. We find a good approximation behavior of the SAR estimator, evaluated around the non-spatial LS estimators. These results can be used as a basis for diagnostic tools to explore the sensitivity of spatial estimators.
    Keywords: Spatial autoregressive models, least squares estimators, sensitivity analysis, Taylor Approximations, Kantorovich inequality
    JEL: C11 C15 C52 E17 R12
    Date: 2011–01
  8. By: Leung, Charles Ka Yui; Teo, Wing Leong
    Abstract: A multi-region, dynamic stochastic general equilibrium (MRDSGE) model is built to show that differences in the price elasticity of housing supply can be related to stylized facts on regional differences in (1) house price level, (2) house price volatility, (3) monetary policy propagation mechanism and (4) household asset portfolio. In addition, regional house prices are found to move more closely with regional fundamentals than with the national GDP. The correlation between the national stock price and the regional housing price also vary significantly across regions, which suggests that optimal portfolio should be region specific.
    Keywords: regional economic difference; monetary policy; housing market; region-specific portfolio
    JEL: R10 E32 E52
    Date: 2010–12
  9. By: Quentin Frère; Hakim Hammadou; Sonia Paty
    Abstract: From the observation that many public goods ?such as zoos? are indivisible, OATES (1988) put forward the idea that the range of public goods should increase with localities? size; this is the ?zoo effect?. But despite this argument appears obvious, it suffers from a limited empirical literature. Therefore, the purpose of the present paper is to test this theoretical argument using data on French inter-municipalities, i.e. local governments that gather several municipalities together in order to manage some local goods. Depending on their spatial position, we split our data set into three groups: urban, suburban and rural inter-municipalities. Using spatial econometrics, estimation results provide evidence for the existence of a zoo effect in French inter-municipalities. In other terms, we find that the variety of services provided in larger inter-municipalities exceeds those in smaller communities. Moreover, the intensity of the zoo effect depends on the urban-rural gradient. It is less intense in the suburban and rural areas than in the urban communities.
    Keywords: Local public services, Population size, Zoo effect, French juridictions, Intermunicipalities, spatial econometrics
    JEL: H4 H7
    Date: 2011–11–18
  10. By: Zhicheng Liang (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: In this paper, by employing the Generalized Method of Moment (GMM) techniques and Chinese provincial level data from 1991 to 2003, we empirically investigate the relationship between finance and growth in post-reform China. We find that financial development significantly promotes economic growth in coastal regions but not in inland regions; the weak finance-growth nexus in inland provinces has exacerbated China's regional disparity.
    Keywords: Financial Development;income disparity;Chinese Economy
    Date: 2011–01–18
  11. By: COPPOLA, Gianluigi (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); GAROFALO, Maria Rosaria (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); MAZZOTTA, Fernanda (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy)
    Abstract: The research described in this paper is consisting of an indepth study of an important area of the Italian Mezzogiorno: the province of Salerno. The aim of the paper is twofold. The first was to identify, by means of cluster analysis, specialization of industrial areas in this province For that, some methodological points are previously selected from the current approach to development economics, that focuses both on genesis and evolution of local systems, by emphasising, among other aspects, the role of the immaterial resources and institutions. The results depict a variegated territory comprising both areas of closed economy, where the purpose of economic activity is to satisfy basic needs (food and housing), and areas that display a certain degree of economic openness towards the outside markets. Many clusters with high indexes of manufacturing specialization are classified as areas of sub furniture or as areas born by an exogenous intervention. The second aim of the research is to measure the social conditions that should foster the growth of new industrial districts within different areas of productive specialization, just identified by the cluster analysis. The approach used was the simple correspondence analysis of a set of qualitative variables surveyed, by a questionnaire given to 462 businesses in the province of Salerno.
    Keywords: industrialization; local labour market; regional and urban analysis; correspondence analysis
    JEL: C10 O14 O18
    Date: 2011–01–18
  12. By: Enrico Giovannetti; Francesco Pagliacci
    Abstract: In this article, we observe existing links between sustainable development and cities’ structural features. First, we identify cluster of cities that are homogenous in structural terms. We then adopt a multiscalar perspective. We compare the results at different territorial scales (LAU-2 and NUTS-3 level). When the sustainable development of the clusters is observed, a clear ‘geography of resource exploitation’ emerges. Then, as a possible response to these problems, we suggest a tool adopted by planners: that is, polycentrism. We look upon it as a possible mode for the governance of networks of medium-sized cities. In particular, we analyse the structural drivers that explain potential for polycentric integration.
    Keywords: Medium-sized cities; polycentrism; sustainable development; cluster analysis
    JEL: Q01 R10 R58
    Date: 2010–12
  13. By: Rani Jeanne Dang (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis); Christian Longhi (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis); Catherine Thomas (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia-Antipolis)
    Abstract: The paper is concerned with the process of SMEs' insertion into innovation projects within regional clusters. The objective is to contribute to a better understanding of this process by examining the underlying mechanisms of territorial innovation dynamics. A particular attention is given to the interplay between the features of territorial dynamics of innovation identified, and SMEs' capacity to participate to collaborative innovation projects. In this perspective, the article analyse the front-end process of territorial inter-organizational innovation, the early stage during which partners negotiate and establish collaborative innovation projects. Rather than investigating how clusters facilitate the access to new resources and knowledge, the crucial question here is how clusters allow the combination of different component of knowledge among heterogeneous actors. First, our findings reveal the key underlying role of architectural knowledge in local innovation processes. Second, they suggest that the nature of architectural knowledge inside the cluster influences the capacity and the motivation of SMEs to participate to local innovation projects. These findings contribute to theory by developing a grounded model of territorial dynamics of innovation and of SMEs integration into localised innovation projects
    Keywords: clusters; SMEs; architectural innovation; knowledge; local innovation projects
    Date: 2010–06–28
  14. By: MANACORDA, Marco (CEP – London School of Economics); PETRONGOLO, Barbara (CEP – London School of Economics)
    Abstract: This paper describes the functioning of a two-region economy characterized by asymmetric wage-setting. Labor market tightness in one region (the leading-region) affects wages in the whole economy. In equilibrium, net labor demand shifts towards the leading region raise unemployment in the rest of the economy and leave regional wages unchanged, causing an increase in aggregate unemployment. This model has some success in explaining the evolution of regional unemployment rates in Italy during the period 1977-1998. Based on SHIW micro data on earnings and ISTAT data on unemployment rates we find strong evidence that wages in Italy only respond to labor market tightness in the North. We estimate that around one third of the increase in aggregate unemployment in Italy can be explained by regional mismatch, mainly due to an excess labor supply growth in the South.
    Keywords: regional imbalances; wage curve; unemployment.
    JEL: E24 J23 J31
    Date: 2011–01–18
  15. By: Pradhan, Jaya Prakash
    Abstract: This study makes an early attempt to estimate the magnitude and intensity of manufacturing firms’ R&D by Indian states during the period 1991‒2008 and analyses the role of regional factors on firm-level R&D activities. As there is little research on state-wise R&D performance of firms in India, this study serves an important contribution to the academic and policy realm. It has brought out the fact the total manufacturing R&D investment in India is unevenly distributed regionally with a few states accounting for disproportionate share of it. Regional heterogeneity or inter-state disparities in R&D has increased between the 1990s and the first decade of the twenty-first century. In view of this persistent regional heterogeneity in R&D, the study has developed and estimated an empirical model for a sample of 4545 Indian manufacturing firms with R&D facilities located in single state and that explicitly includes regional factors as probable factors affecting R&D. The three-step Censored Quantitle Regression results confirm that regional factors play an important role in shaping the R&D intensity of the sample of firms. This led us to some useful policy suggestions for regional governments to promote local firms’ R&D activities.
    Keywords: Regional heterogeneity; R&D; manufacturing firms; Indian states; censored quantitle regression.
    JEL: O18 O30 O32 C21 L60
    Date: 2011–01–12
  16. By: IMBRIANI, Cesare (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); REGANATI, Filippo (Dipartimento Sociologia e Comunicazione, Università di Roma La Sapienza)
    Abstract: This work examines the main theoretical and empirical interpretations regarding the effects of foreign direct investment on productivity of local firms and, in particular, in which way productivity spillovers are related to the existence of regional differences. By taking into consideration the Italian manufacturing sector and using cross-section data, we find that although at a national level productivity levels are higher in the domestic sectors where multinational firms account for larger shares, productivity spillovers are concentrated only in the north-western area of Italy.
    Keywords: foreign direct investment; productivity spillovers
    JEL: F23 O30
    Date: 2011–01–18
  17. By: Sebastian Vollmer (Harvard University & University of Hannover); Hajo Holzmann (University of Marburg); Florian Ketterer (University of Marburg); Stephan Klasen (University of Göttingen)
    Abstract: We investigate to what extent convergence in production levels per worker has been achieved in Germany since unification. To this end, we model the distribution of GDP per employee across German districts using two-component normal mixtures. While in the first year after unification, the two component distributions were clearly separated and bimodal, corresponding to the East and West German districts, respectively, in the following years they started to merge showing only one mode. Still, using the recently developed EM-Test for homogeneity in normal mixtures,the hypothesis of just a single normal component for the whole distribution is clearly rejected for all years. A Posterior analysis shows that about half of the East German districts were assigned to the richer component in 2006, thus catching up to levels of the West. The growth rate of a mover district is about one percentage point higher than the growth rate of a non-mover district which had the same initial level of GDP per employee.
    Keywords: Regional convergence; distribution dynamics; mixture models; Germany; unification
    JEL: O47 R11
    Date: 2010–12–31
  18. By: DESTEFANIS, Sergio Pietro (CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy); FONSECA, Raquel (RAND Corporation)
    Abstract: A matching theory approach is utilised to assess the impact on the Italian labour market of the 1997 legge Treu, which considerably eased the regulation of temporary work and favoured its growth in Italy. We re-parameterise the matching function as a Beveridge Curve and estimate it as a production frontier. We find huge differences in matching efficiency between the South and the rest of the country. The legge Treu appears to have reduced unemployment in the more developed regions of the country but did not greatly affect the matching efficiency of the regional labour markets.
    Keywords: temporary contracts; matching efficiency; regional disparities
    JEL: C24 J64 J69
    Date: 2011–01–18
  19. By: Berliant, Marcus; Tabuchi, Takatoshi
    Abstract: We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three district model. A stable equilibrium accounting for both the economic and political sectors is shown to exist. Restricting to an example, we show that full information equivalence holds in only one of the three districts when transport cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet.
    Keywords: information aggregation in elections; informative voting; new economic geography; local politics
    JEL: D82 D72 R12
    Date: 2011–01–13

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