nep-geo New Economics Papers
on Economic Geography
Issue of 2011‒08‒02
eight papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Regional wage differences in the Netherlands: Micro-evidence on agglomeration externalities By Stefan Groot; Henri de Groot
  2. The NRU and the Evolution of Regional Disparities in Spanish Unemployment By Roberto Bande; Marika Karanassou
  3. Smart specialisation, regional growth and applications to EU cohesion policy By Philip McCann; Raquel Ortega-Argilés
  4. Urban Density, Human Capital, and Productivity: An empirical analysis using wage data By MORIKAWA Masayuki
  5. Institutions, geography, trade, and income per capita: A spatial-simultaneous equation approach By Ngeleza, Guyslain
  6. The regional economic structure of Brazil in 1959: an overview based on an inter-State input-output system By Barros, Gustavo; Guilhoto, Joaquim José Martins
  7. To assemble to resemble? A study of tax disparities among French municipalities By Marie-Laure Breuillé; Pascale Duran-Vigneron; Anne-Laure Samson
  8. Socio-Spatial Mobility in British Society By Clark, William A.V.; van Ham, Maarten; Coulter, Rory

  1. By: Stefan Groot; Henri de Groot
    Abstract: <p>Based on micro-data on individual workers for the period 2000–2005, we show that regional wage differentials in the Netherlands are small but present. </p><p>A large part of these differentials can be attributed to individual characteristics of workers. Remaining effects are partially explained by variations in employment density, with an elasticity of about 3.8 percent and by Marshall-Arrow-Romer externalities, where doubling the share of a (2-digit NACE) industry results in a 2.4 percent higher productivity.</p><p>We find evidence for a negative effect of competition (associated with Porter externalities) and diversity (associated with Jacobs externalities).</p>
    JEL: J24 O12 R11 R23
    Date: 2011–07
  2. By: Roberto Bande (University of Santiago and IDEGA); Marika Karanassou (Queen Mary, University of London and IZA)
    Abstract: On both theoretical and empirical grounds, this paper provides evidence that refutes the natural rate of unemployment (NRU) hypothesis as an explanation of the evolution of regional disparities in the unemployment rate. We first present our analytical framework, which follows the chain reaction theory (CRT) of unemployment and argues that (i) a system of interactive labour market equations, rather than a single-equation unemployment rate model, is better equipped to accommodate unemployment dynamics, and (ii) due to the interplay of frictions and growth in labour markets, the NRU ceases to be an attractor of the unemployment rate time path. We then provide evidence that the Spanish economy is characterised by large and persistent disparities in the regional unemployment rates. Through standard kernel density tecnhiques, we demonstrate the existence of marked differences between two groups of high and low unemployment regions that remain stable in their composition through time. Finally, we review our empirical labour market model for each group of regions and evaluate the corresponding natural rates. Our findings confirm that the evolution of regional disparities cannot be attributed to disparities in the natural rates, given that these, although different, do not act as an attractor of unemployment. Thus, the NRUs offer little help in the formulation of labour market policies.
    Keywords: Regional unemployment, Disparities, Kernel, Natural rate, Frictional growth
    JEL: R23 J64
    Date: 2011–07
  3. By: Philip McCann (University of Groningen); Raquel Ortega-Argilés (Instituto Superior Técnico)
    Abstract: This paper examines the arguments underpinning the smart specialisation concept, an idea which originally emerged from the sectoral growth literature, and one which has recently been applied with to the regional policy context. The shift from a sectoral to a regional context appears prima facie to be quite straightforward but this paper explains that translating the idea to a regional policy context is rather more complex that it at first appears and implies some changes in both interpretation and implications. The outcomes of this are that in a regional policy setting the smart specialisation logic is seen to be broadly consistent with the overall reforms of EU Cohesion Policy. However, in a regional policy setting there is no reason why ICTs should be prioritised over many forms of intangible capital, and the promotion of technological diversification via entrepreneurship may need to be related to specific sectors or activities.
    Keywords: Smart, specialisation, EU, cohesion policy, innovation, sector, place-based
    JEL: O31 O33 R11 R58
    Date: 2011
  4. By: MORIKAWA Masayuki
    Abstract: Numerous studies have indicated that densely populated cities enhance the productivity of workers through knowledge spillover and superior matching with employers in the labor market. This paper quantitatively analyzes the relationship among urban density, human capital, and wages by using micro data from the <i>Basic Survey on Wage Structure</i> for the years from 1990 to 2009. According to the estimation of standard wage functions augmented with population density, the agglomeration premium is larger for workers with higher observable skills such as education, tenure, and potential experience, which suggests rapid learning and superior matching in densely populated cities. Under structural changes such as a declining population and the trend toward a knowledge-based service economy, forming densely populated areas by facilitating the migration of workers has desirable effects throughout Japan on both individual wages and firm productivity.
    Date: 2011–07
  5. By: Ngeleza, Guyslain
    Abstract: This paper tests a series of prominent hypotheses regarding how institutions, geography, and trade interact to influence income per capita using a novel spatial econometric approach to control for both spillovers among neighboring countries and spatially correlated omitted variables. Simultaneous equations are used to identify alternative channels through which country characteristics might affect income through trade and institutions, and then to test the robustness of those effects. Evidence indicated that both institutions and trade influence growth. Geographical factors such as whether a country is landlocked and its distance to the equator influence income, but only through trade. Data covering 95 countries across the world from 1960 through 2002 was used to construct a pooled dataset of 5-year averages (9 in all) centered on 1960, 1965, and so on through 2000. Both limited and full information estimators, partly based on a generalized moments (GM) estimator for spatial autoregressive coefficients, were used. These allow for spatial error correlation, correlation across equations, and the presence of spatially lagged dependent variables.
    Keywords: economic growth, Geography, Institutions, simultaneous equations, spatial econometrics, trade,
    Date: 2011
  6. By: Barros, Gustavo; Guilhoto, Joaquim José Martins
    Abstract: This paper aims at describing the regional configuration of 1959 Brazil’s productive structure through the estimation of an Inter-State Input-Output system. The estimated matrix is the oldest of this kind for Brazil. It can, hence, be an important tool for the study of the regional productive structure at an historical moment in which the regional question appeared as a central national issue. In this paper we describe estimation procedures and sources of data, and present some general characterization of the regional structure of the economy in 1959 through selected structural indicators.
    Keywords: Regional Economic Structure; Brazil; Input-Output; Economic Development; Industrialization
    JEL: R15
    Date: 2011
  7. By: Marie-Laure Breuillé (INRA); Pascale Duran-Vigneron (University of Exeter); Anne-Laure Samson (Université Paris Dauphine)
    Abstract: The purpose of this paper is to analyze the effect of inter-municipal cooperation on local taxation. Municipalities that join/create an inter-municipal jurisdiction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the differences in differences method with a quasi-exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal effect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). Moreover, we show that cooperation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities.
    Keywords: Inter-municipal cooperation, tax competition, fiscal disparities
    JEL: H23 H7
    Date: 2011
  8. By: Clark, William A.V. (University of California, Los Angeles); van Ham, Maarten (Delft University of Technology); Coulter, Rory (University of St. Andrews)
    Abstract: The research reported in this paper examines the nature and extent of socio-spatial mobility in the United Kingdom. In contrast with previous studies, we do not only investigate who moves out of deprived neighbourhoods, but our models cover the entire spectrum of neighbourhoods and provide a more complete interpretation of the process of mobility across socio-spatial structures. We use the Index of Multiple Deprivation (IMD) to classify neighbourhoods defined as small areas containing approximately 1500 people. We use the data from all available waves of the British Household Panel Survey (BHPS) to trace moves between these neighbourhoods, classified into deprivation deciles. We define upward socio-spatial mobility as moving to neighbourhoods with lower levels of deprivation. The focus on residential choices and the outcomes – residential sorting – allows us to measure the fluidity of the British social structure. We show that restricted ability to compete for the better neighbourhoods combines with residence in neighbourhoods with relatively high degrees of deprivation to limit opportunities for social mobility. The analysis shows that education and income play critical roles in the ability of individuals to make neighbourhood and decile gains when they move. There are also powerful roles of being unemployed and being (and becoming) a social renter. Both these latter effects combine to seriously restrict the possibilities for socio-spatial movement for certain groups. The results suggest serious structural barriers to socio-spatial mobility in British society, barriers which are directly related to the organisation of the housing market.
    Keywords: residential sorting, residential mobility, socio-economic status, deprivation, neighbourhoods
    JEL: J61 R23
    Date: 2011–07

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