nep-geo New Economics Papers
on Economic Geography
Issue of 2011‒06‒18
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria By Marius Brülhart; Céline Carrère; Federico Trionfetti
  2. Big ideas: economic geography By Henry Overman
  3. The Optimal Size of German Cities An Efficiency Analysis Perspective By Hitzschke, Stephan
  4. Patterns of population location in Auckland By Maré, David C.; Coleman, Andrew; Pinkerton, Ruth
  5. Economic Growth in Cities: Issues for Central Government By Henry G. Overman
  7. Impact assessment of interregional government transfers in Brazil: an input-output approach By Luque, Carlos A.; Haddad, Eduardo A.; Lima, Gilberto T.; Sakurai, Sergio N.; Costa, Silvio M.
  8. In brief: Location, location, location: why geography matters for R&D By John Van Reenen
  9. Productivity and Local Workforce Composition By Maré, David. C; Fabling, Richard
  10. Regional deposits and demographic changes By Nagayasu, Jun
  11. Behind the Eastern-Western European convergence path: the role of geography and trade liberalization By Adolfo Cristobal-Campoamor; Osiris Jorge Parcero
  12. A spatial approach to measure productivity spillovers of foreign affiliated firms in Turkish manufacturing industries By Karaçuka, Mehmet; Catik, A. Nazif
  13. Geographic Concentration of Business Services Firms: A Poisson Sorting Model By Hans Koster; Jos N. van Ommeren; Piet Rietveld

  1. By: Marius Brülhart; Céline Carrère; Federico Trionfetti
    Abstract: We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the "border regions" are defined narrowly, within a band of less than 50 kilometers, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.
    Keywords: trade liberalization; spatial adjustment; regional labor supply; natural experiment
    JEL: F15 R11 R12
    Date: 2011–06
  2. By: Henry Overman
    Abstract: Henry Overman sketches the evolution of CEP research on why prosperity is so unevenly distributed across cities, regions and nations
    Date: 2011–03
  3. By: Hitzschke, Stephan
    Abstract: This work investigates the interrelation between production efficiency and population size of German cities. The productive efficiency in this context is the scale efficiency, which is a result of positive and negative agglomeration externalities. The investigation is performed in a two-stage process. First, the efficiency in terms of scale efficiency is measured using nonparametric methods. The second stage investigates the relation of scale efficiency and populations size. It turns out that the optimal city size in Germany is about 220,000 inhabitants, which is almost the mean size of all German cities involved. Although there are regional differences, optimal city size remains stable as the mean size.
    Keywords: Efficiency analysis, optimal city size, population size, German cities
    Date: 2011–06
  4. By: Maré, David C. (Motu Economic and Public Policy Research); Coleman, Andrew (Motu Economic and Public Policy Research); Pinkerton, Ruth (Motu Economic and Public Policy Research)
    Abstract: This paper uses spatial statistical techniques to examine the economic determinants of residential location patterns in Auckland in 2006. The primary empirical focus of this paper is descriptive. We seek to establish the extent to which there are identifiable population subgroups that cluster together within the Auckland Urban Area, and further, to ascertain where these groups mainly live. It confirms previous findings of strong ethnic clustering and identifies clustering by qualification, income, and country of birth. It examines the interaction between incomes, land prices, and population density, and the relationship of land price with access to selected locational amenities.
    Keywords: Residential location choice; local amenities; residential sorting
    JEL: R12 R23 R31
    Date: 2011–05
  5. By: Henry G. Overman
    Abstract: This note is concerned with the role of cities and urban policy in growth. Decentralisation from central to local government may help city leaders raise economic performance. It also generates new policy choices for central government - especially in policy areas where local leaders are unwilling or unable to take actions that benefit growth. Policy decisions in this area will also impact on geographical concentrations of firms that are located outside cities.
    Date: 2011–06
  6. By: Hoang Van Long; Mitsuyasu Yabe (Department of Agriculture and Resource Economics, Faculty of Agriculture, Kyushu University, Japan)
    Abstract: In Vietnam, the poor have long been assumed to be the ethnic minorities mostly living in the highlands. After more than two decades of introducing Doi moi policy into the economy, along with having enjoyed various improvements in social and economic aspects, the disparities between the majority and ethnic majorities, the lowlands and the highlands, and between regions, still have been widened. This paper aims at examining income inequality, its affecting factors in rural areas, and exploring the current situation of regional economic disparities using both development policy review and econometrics approaches. Data from Vietnam Household Living Standard Survey (VHLSS) 2008 was used in the study. The expenditure per capita was employed as the dependent variable to regress with household characteristics and resources. In addition, the regional dummy variables were employed to show the different effects from different geographic locations. The results showed that the household characteristics and resources such as education level, perennial land area, water surface area, and the accessibility to infrastructure facilities such as road, electricity and local market had positive effect on expenditure. Furthermore, the North Central Coast region showed negative impact on household expenditure. Interestingly, this finding does not absolutely follow the hypothesis and indicates that the economic development strategy and polices should be adjusted to decrease the gap among regions based on their economic advantages for balancing the economic situation of the whole country in the future
    Keywords: Inequality, Disparity, Regional Development, Rural Development, Vietnam
    JEL: M0
    Date: 2011–03
  7. By: Luque, Carlos A.; Haddad, Eduardo A.; Lima, Gilberto T.; Sakurai, Sergio N.; Costa, Silvio M.
    Abstract: Redistributive policies carried out by the central government through interregional government transfers is a relevant feature of the Brazilian federal fiscal system. Regional shares of the central government revenues in the poorer regions have been recurrently smaller than the shares of central government expenditures in those regions. Appeal to core-periphery outcomes could be made, as São Paulo, the wealthiest state in the country, concentrated, in 2005, over 40% of total Federal tax revenue, receiving less than 35% of Federal expenditures. These figures suggest a redistribution of public funds from the spatial economic core of the economy to the peripheral areas. This paper investigates the role interregional transfers play in the redistribution of activities in the country, using an interregional input-output approach. Counterfactual simulations allow us to estimate some costs and benefits, for the core and periphery respectively, from such fiscal mechanisms.
    Keywords: Interregional government transfers; input-output analysis; impact analysis; Brazilian economy
    JEL: H77 H5 R15
    Date: 2011–05
  8. By: John Van Reenen
    Abstract: John Van Reenen and colleagues assess the impact on growth of 'knowledge spillovers' between corporate research labs located close to each other
    Date: 2011–03
  9. By: Maré, David. C (Motu Economic and Public Policy Research); Fabling, Richard (Reserve Bank of New Zealand)
    Abstract: This chapter examines the link between firm productivity and the population composition of the areas in which firms operate. We combine annual firm-level microdata on production, covering a large proportion of the New Zealand economy, with area-level workforce characteristics obtained from population censuses. Overall, the results support the existence of agglomeration effects that operate through labour markets. We find evidence of productive spillovers from operating in areas with high-skilled workers, and with high population density. A high-skilled local workforce benefits firms in high-skilled and high-research and development industries, and small firms. The benefits of local population density are strongest for firms in dense areas, and for small and new firms. Firms providing local services are more productive in areas with high shares of migrants and new entrants, consistent with local demand factors.
    Keywords: productivity, agglomeration, workforce composition
    JEL: R1 R3 D24
    Date: 2011–05
  10. By: Nagayasu, Jun
    Abstract: This paper empirically analyzes the relationship between regional deposits and demographic changes. Using different types of deposit data from Japan which has experienced a sharp increase in the number of retirees, we provide clear evidence that an increase in the dependency ratio is negatively correlated with overall deposits but positively with the most liquid deposits.
    Keywords: Regional deposits; Demographic changes; Panel cointegration; Panel DOLS
    JEL: F4 E1
    Date: 2011–04
  11. By: Adolfo Cristobal-Campoamor (ISET, Tbilisi); Osiris Jorge Parcero (United Arab Emirates University)
    Abstract: This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the period 1990-2005. In contrast to the existing literature, which has favored technological explanations, trade liberalization is the only driving force. The model correctly predicts that in the first half of the period trade liberalization led to divergence in GDP per capita, both between the West and the East and within the East. Consistent with the data, in the second half of the period, this process was reversed and convergence became the dominant force.
    Date: 2011–05
  12. By: Karaçuka, Mehmet; Catik, A. Nazif
    Abstract: In this paper we aim to analyze the productivity spillovers of foreign affiliated and domestic firms in Turkish manufacturing industries. As a novelty inter-sectoral linkages are modeled through the use of spatial models. Our results indicate the existence of positive and significant productivity spillovers among the neighborhood firms. We also find that an increase in the share of foreign affiliated firms in a given industry has positive impact on the productivity level of vertically related industries. However, our results do not provide any clear evidence that domestic firms benefit from the foreign affiliated firms either operating in the same industry or in the neighborhood industries. The findings suggest that unlike the effects of foreign affiliated firms, research and development expenditures significantly contribute to the productivity levels of domestic firms. --
    Keywords: Productivity,foreign direct investment,research and development,spatial econometrics
    JEL: C31 J24 O14 O33
    Date: 2011
  13. By: Hans Koster (VU University Amsterdam); Jos N. van Ommeren (VU University Amsterdam); Piet Rietveld (VU University Amsterdam)
    Abstract: This paper examines the effects of specialisation (within-sector clustering) and diversity (between-sector clustering) on business services profitability and location choice. We apply a semiparametric Poisson sorting model allowing for firm-specific effects. We find that for most firms, profitability of business services firms is substantially higher close to specialised clusters of business services firms. A standard deviation increase in business services specialisation leads to on average a 40 percent increase in the probability that a business services firm locates there, supporting theories of Marshall, Arrow and Romer. It is also profitable for most business services firms to locate near a group of firms that belong to the same sector, not necessarily business services firms, so diversity is negatively related to location decisions. Almost all firms either benefit from within-sector clustering or between-sector clustering. Within-sector clusters are particularly profitable for large mature firms, whereas between-sector clusters are relatively more profitable for smaller innovative firms.
    Keywords: Sorting; Agglomeration Economies; Specialisation; Diversity; Heterogeneity; Semiparametric Estimation
    JEL: R12 R14 R39
    Date: 2011–06–06

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