nep-geo New Economics Papers
on Economic Geography
Issue of 2011‒06‒11
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial clustering and nonlinearities in the location of multinational firms By Roberto Basile; Luigi Benfratello; Davide Castellani
  2. Rise And Fall Of Cities, Measuring Spatial Clustering And Economies Of Urban Agglomeration In West Java By Rullan Rinaldi; Eva Nurwita
  3. Does Globalization Affect Regional Growth? Evidence for NUTS-2 Regions in EU-27 By Polasek, Wolfgang; Sellner, Richard
  4. The Spatial Organization of Multinational Firms By Fabrice Defever
  5. Well-being Disparities Within the Paris Region. A Capabilist Spatialized Outlook By Lise Bourdeau-Lepage; Elisabeth Tovar
  6. The effects of agglomeration on wages: evidence from the micro-level By Bernard Fingleton; Simonetta Longhi
  7. Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax. By Patrizio Lecca; Peter McGregor; Kim Swales; Ya Ping Yin
  8. Complexity and Technological Change: Knowledge Interactions and Firm Level Total Factor Productivity By Antonelli Cristiano; Scellato Giuseppe
  9. Size and The City: Productivity, Match Quality and Wage Inequality By YIP, Chi Man
  10. Patterns of Collaborations between Regional Firms and Universities: Evidence from the Piedmont region in Italy By Bodas Freitas Isabel Maria; Geuna Aldo; Rossi Federica
  11. Is distance dying at last? Falling home bias in fixed effects models of patent citations By Rachel Griffith; Sokbae 'Simon' Lee; John Van Reenen
  12. Regional Economic Disparity: Real wages and happiness (Japanese) By MORIKAWA Masayuki
  13. An experimental study on multi-dimensional spatial product differentiation By Przemysław Kusztelak
  14. The impact of higher education institution-firm knowledge links on establishment-level productivity in British regions By Richard Harris; Qian Cher Li; John Moffat
  15. La industria cultural en Andalucía: un estudio comparativo en el contexto de las regiones españolas By Antonio Rafael Peña Sánchez; María Ángeles Frende Vega

  1. By: Roberto Basile; Luigi Benfratello; Davide Castellani
    Abstract: We propose a semiparametric geoadditive negative binomial model of industrial location which allows to simultaneously address some important methodological issues, such as spatial clustering and nonlinearities, which have been only partly addressed in previous studies. We apply this model to analyze location determinants of inward greenfield investments occurred over the 2003-2007 period in 249 European regions. The inclusion of a geoadditive component (a smooth spatial trend surface) allows to control for omitted variables which induce spatial clustering, and suggests that such unobserved factors may be related to regional policies towards foreign investors Allowing for nonlinearities reveals, in line with theoretical predictions, that the positive effect of agglomeration economies fades as the density of economic activities reaches some limit value.
    Keywords: industrial location, negative binomial models, geoadditive models, european union.
    JEL: C14 C21 F14 F23
    Date: 2011–05–02
  2. By: Rullan Rinaldi (Department of Economics, Padjadjaran University); Eva Nurwita (Department of Economics, Padjadjaran University)
    Abstract: With others neighboring Provinces in the western part of Java, the West Java Province shares the southeast Asian most densely urban area (Bodebek as part of Jabodetabek and Greater Bandung). This research tries to identify the spatial clustering of urban economies activities using employment data from Economic Census of 2006 as proxy for urban agglomeration. Using the identification result, we then estimate aggregate production function of the urban agglomeration area to calculate it’s economies of agglomeration. From the result we found that both Bodebek and Greater Bandung metropolitan area are both have been reach the stage of saturation in their economic activity. Meanwhile, the alternative definition of Bodebek shows the stage of slight increasing return to scale, indicate the economies are trying to expand to regain the economies of scale that has been saturated in origin area.
    Keywords: Sub National Data, Indonesia
    JEL: R11
    Date: 2011–06
  3. By: 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: We analyze the influence of newly constructed globalization measures on regional growth for the EU-27 countries between 2001 and 2006. The spatial Chow-Lin procedure, a method constructed by the authors, was used to construct on a NUTS-2 level a complete regional data for exports, imports and FDI inward stocks, which serve as indicators for the influence of globalization, integration and technology transfers on European regions. The results suggest that most regions have significantly benefited from globalization measured by increasing trade openness and FDI. In a non-linear growth convergence model the growth elasticities for globalization and technology transfers decrease with increasing GDP per capita. Furthermore, the estimated elasticity for FDI decreases when the model includes a higher human capital premium for CEE countries and a small significant growth enhancing effect accrues from the structural funds expenditures in the EU.
    Keywords: Regional globalization measures, EU integration (structural funds), Regional growth convergence models, Foreign direct investment (FDI)
    JEL: C11 C15 C51 R12
    Date: 2011–05
  4. By: Fabrice Defever
    Abstract: Using six years of firm-level data covering 224 regions of the enlarged European Union, we evaluate the importance to a firm of locating its activities (production, headquarters, R&D, logistics and sales) close together. We find that, after controlling for regional characteristics, being closely located to a previous investment positively affects firm location choice. However, the impact of distance is dependent on the type of investment (production or service). While within-firm co-location is important for both service and production activities, only production plants are likely to be located close to prior production investments. In this latter case, national borders have a surprisingly positive effect, increasing the probability of choosing a nearby location, but on the other side of the border.
    Keywords: Functional fragmentation, vertical linkages, location choice
    JEL: F23 L22 R3
    Date: 2010–12
  5. By: Lise Bourdeau-Lepage; Elisabeth Tovar
    Abstract: Urban riots, such as in France in 2005, have drawn attention on the spatial determinants of social discontent. We provide evidence on the pervasive collective perception of a dramatic increase of the well-being disparities within the Paris Region during the decade preceding the 2005 riots. We ground our well-being indicator on a spatialized version of Sen's normative capabilist approach, which allows to explicitly take into account the impact of one's localization on one's realizations, opportunities and freedom. Then, using multidimensional poverty indicators and ESDA, we show a global improvement of the Paris region municipalities' Capabilist Spatialized well-being (CaS) between 1999 and 2006 as well as a catching-up phenomenon between advantaged and disadvantaged municipalities. Nevertheless, we also find a growing cluster of very disadvantaged municipalities, some of which have witnessed a decrease of their CaS level. This evidence may explain the belief of a growing socio-spatial fracture within the Paris region.
    Keywords: capabilist well-being, socio-spatial disparities, Paris region
    Date: 2011
  6. By: Bernard Fingleton (Department of Economics, University of Strathclyde); Simonetta Longhi (Institute for Social and Economic Research (ISER), University of Essex.)
    Abstract: effects of agglomeration on wages: evidence from the micro-level
    Abstract: This paper estimates individual wage equations in order to test two rival non-nested theories of economic agglomeration, namely New Economic Geography (NEG), as represented by the NEG wage equation and urban economic (UE) theory , in which wages relate to employment density. The paper makes an original contribution by evidently being the first empirical paper to examine the issue of agglomeration processes associated with contemporary theory working with micro-level data, highlighting the role of gender and other individual-level characteristics. For male respondents, there is no significant evidence that wage levels are an outcome of the mechanisms suggested by NEG or UE theory, but this is not the case for female respondents. We speculate on the reasons for the gender difference.
    Keywords: urban economics, new economic geography, household panel data.
    JEL: C21 C31 C33 D1 O18 R20 R12
    Date: 2011–05
  7. By: Patrizio Lecca (Department of Economics, Strathclyde University); Peter McGregor (Fraser of Allander Institute, Department of Economics, Strathclyde University); Kim Swales (Department of Economics, University of Strathclyde); Ya Ping Yin (Department of Statistics, Economics, Accounting and Management Systems, University of Hertfordshire)
    Abstract: Inverted Haavelmo Effects in a General Equilibrium Analysis of the Impact of Implementing the Scottish Variable Rate of Income Tax.
    Abstract: The Scottish Parliament has the authority to make a balanced-budget expansion or contraction in public expenditure, funded by corresponding local changes in the basic rate of income tax of up to 3p in the pound. This fiscal adjustment is known as the Scottish Variable Rate of income tax, though it has never, as yet, been used. In this paper we attempt to identify the impact on aggregate economic activity in Scotland of implementing these devolved fiscal powers. This is achieved through theoretical analysis and simulation using a Computable General Equilibrium (CGE) model for Scotland. This analysis generalises the conventional Keynesian model so that negative balanced-budget multipliers values are possible, reflecting a regional “inverted Haavelmo effectâ€. Key parameters determining the aggregate economic impact are the extent to which the Scottish Government create local amenities valuable to the Scottish population and the extent to which this is incorporated into local wage bargaining.
    Keywords: Fiscal federalism, devolution, regional wage bargaining and migration, Scotland, regional computable general equilibrium analysis.
    JEL: C68 D58 H71 R13 R23
    Date: 2010–09
  8. By: Antonelli Cristiano; Scellato Giuseppe (University of Turin)
    Abstract: The analysis of social interactions as drivers of economic dynamics represents a growing field of the economics of complexity. Social interactions are a specific form of interdependence whereby the changes in the behavior of other agents affect utility functions for households and production functions for producers. In this paper, we apply the general concept of social interactions to the area of the economics of innovation and we articulate the view that knowledge interactions play a central role in the generation of new technological knowledge so that innovation becomes the emergent property of a system, rather then the product of individual actions. In particular, we articulate and test the hypothesis that different layers of knowledge interactions play a crucial role in determining the rate of technological change that each firm is able to introduce. The paper presents an empirical analysis of firm level total factor productivity (TFP) for a sample of 7020 Italian manufacturing companies observed during the years 1996-2005 that is able identify the distinctive role of regional, inter-industrial and localized intra-industrial knowledge interactions as distinctive and significant determinants, together with internal research and innovation efforts, of changes in firm level TFP
    Date: 2011–03
  9. By: YIP, Chi Man
    Abstract: This paper elucidates the impact of city growth on wage and wage inequality using a search-theoretical approach. Firms differ in capital intensity and land intensity of the jobs created. When a worker meets a job via a matching technology, a match-specific productivity level is realized and they sign a job contract when they agree with the bargaining wage. A rise in population density leads to rental increment. As a consequence, a higher expected flow profit is required for the creation of a good job. Rent-sharing ensures an increase of the average wage in the good-job sector. This, in turn, increases the reservation wage of workers in the equilibrium. Although the rental increment does not affect the setup costs in the bad-job sector, higher realized productivity level is required to cover higher reservation wage. Since only job contacts with realized productivity levels exceeding reservation productivity threshold are observed, such increase in the threshold raises also the average wage in the bad-job sector. Hence, the average productivity, the match quality and wage go up in each sector unambiguously, giving rise to urban wage premium. In addition, this paper predicts that urbanization widens residual wage inequality of a city. Existing empirical evidence is presented to support the implications of this model.
    Keywords: Urban Wage Premium; Match Quality; Job Match
    JEL: J31 O15 J64
    Date: 2011–04–11
  10. By: Bodas Freitas Isabel Maria; Geuna Aldo; Rossi Federica (University of Turin)
    Abstract: This paper explores the factors affecting firms’ decisions concerning whether to collaborate with universities in their region or elsewhere, and the level of investment in the collaboration. Building upon an original survey of a representative sample of firms in the Italian region of Piedmont, the paper examines the effect of firm and collaboration characteristics (including the type and diversity of each collaboration’s objectives) on the location of the university partners and on the investment in university-industry collaborations. We find that firms that are smaller, less engaged in international markets, less vertically integrated, and that engage in collaborations with universities in order to solve organizational problems, tend to collaborate more with regional universities. Firms tend to invest more in collaborations focused only on R&D activities with nearby universities, though the maximum amount spent in a collaboration was with a foreign university.
    Date: 2011–03
  11. By: Rachel Griffith (Institute for Fiscal Studies and University of Manchester); Sokbae 'Simon' Lee (Institute for Fiscal Studies and Seoul National University); John Van Reenen
    Abstract: <p>We examine the "home bias" of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models and we apply it to data on over two million patent citations between 1975 and 1999. Home bias is exaggerated in models that do not control for fixed effects. The fall in home bias over time is weaker for the pharmaceuticals and information/communication technology sectors where agglomeration externalities may remain strong.</p>
    Date: 2011–05
  12. By: MORIKAWA Masayuki
    Abstract: This paper presents some empirical facts on regional economic disparity in Japan from an equity perspective. The main findings are as follows: 1) interprefectural differences explain less than 10% of wage disparity amongst individuals, with the majority of disparity being attributable to variances within prefectures; 2) according to the Oaxaca-Blinder decomposition analysis, from 70% to 80% of the disparities of nominal wages between Kanto and Tohoku or Kanto and Kyushu is explained by observable worker characteristics, workplace characteristics, and price level differences. Among the positive relationship between city population and wages, about half is explained by the observable worker and workplace characteristics, and from one third to one half of the remaining half is attributable to price differences; 3) prefecture minimum wages adjusted by the cost of living index indicate that the real minimum wage is the lowest in Tokyo; 4) Although household income is an important determinant of individual happiness, the effect of income on the differences in regional happiness is almost nonexistent. These findings suggest that, from the viewpoint of equity in well-being of people, distributional policy should focus on individuals or households.
    Date: 2010–07
  13. By: Przemysław Kusztelak (Faculty of Economic Sciences, University of Warsaw)
    Abstract: This study presents the results of an experiment on spatial differentiation of products in Hotelling-type models with different grades of complexity for companies’ choices of space. Three models were compared, including models with a single decision variable (single-dimensional space with automatically calculated prices), two decision variables (single-dimensional space with prices assigned by the participants) and three decision variables (bi-dimensional space with prices assigned by the participants). The research revealed that in more complex conditions, the product differentiation was smaller and that the prices were lower than in a simple environment when the Nash equilibrium was confirmed. Companies that function in complex conditions do not take advantage of the opportunity to make high profits based on product differentiation. This has a greater impact on price rigidity with respect to product variety than could be theoretically predicted. Strategies based on product differentiation are, therefore, less profitable than expected based on theoretical predictions.
    Keywords: spatial competition; product differentiation; laboratory experiments
    JEL: C72 C92 D43
    Date: 2011
  14. By: Richard Harris (Department of Economics, University of Glasgow); Qian Cher Li (Imperial College, London); John Moffat (University of Strathclyde)
    Abstract: This paper estimates whether sourcing knowledge from and/or cooperating on innovation with higher education institutions impacts on establishment-level TFP and whether this impact differs across domestically-owned and foreign-owned establishments and across the regions of Great Britain. Using propensity score matching, the results show overall a positive and statistically significant impact although there are differences in the strength of this impact across production and non-production industries, across domestically-owned and foreign-owned firms, and across regions. These results highlight the importance of absorptive capacity in determining the extent to which establishments can benefit from linkages with higher education institutions.
    Keywords: Universities; University-Industry knowledge links; Firm-level productivity
    JEL: D24 I23
    Date: 2010–09
  15. By: Antonio Rafael Peña Sánchez (Universidad de Cádiz); María Ángeles Frende Vega (Universidad de Cádiz)
    Abstract: El documento se centra en el periodo 2000-2008 y aporta también una revisión sobre la contribución de la actividad cultural al desarrollo económico y a la creación de empleo en la Comunidad Autónoma.
    Keywords: empresas culturales, crecimiento económico, convergencia, desarrollo regional.
    JEL: L82 O18 R11
    Date: 2011

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