nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒01‒03
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial Frictions By Kristian Behrens; Giordano Mion; Yasusada Murata; Jens Südekum
  2. Ethnic Networks and the Location Choice of Migrants in Europe By Klaus Nowotny; Dieter Pennerstorfer
  3. Do EU structural funds promote regional employment? Evidence from dynamic panel data models By Philipp Mohl; Tobias Hagen
  4. Sectoral Shifts, Diversification and Regional Unemployment: Evidence from Local Labour Systems in Italy By Basile, Roberto; Girardi, Alessandro; Mantuano, Marianna; Pastore, Francesco
  5. Internal Geography and External Trade: regional disparities in Italy, 1861-2011 By Brian A’Hearn; Anthony J. Venables
  7. Does academic research affect the local growth pattern? Empirical evidence based on Swedish data By Lundberg, Johan
  8. Rural Labor Absorption Efficiency in Urban Areas under Different Urbanization Patterns and Industrial Structures: The Case of China By Liwen, Chen; Zeng, Xiangquan; Yumei, Yang
  9. Productivity Improvement in the Specialized Industrial Clusters: The Case of the Japanese Silk-Reeling Industry By Arimoto, Yutaka; Nakajima, Kentaro; Okazaki, Tetsuji
  10. Growth in a Cross-Section of Cities: Location, Increasing Returns or Random Growth? By Rafael González-Val; Jose Olmo
  11. Regional input-output modelling in Germany: The case of North Rhine-Westphalia By Kronenberg, Tobias; Többen, Johannes
  12. A relational approach to knowledge spillovers in biotech. Network structures as drivers of inter-organizational citation patterns By Ron Boschma; Pierre-Alexandre Balland; Dieter Kogler
  13. Unemployment, commuting, and search intensity By Wrede, Matthias
  14. California Dreaming? Cross-Cluster Embeddedness and the Systematic Non-Emergence of the 'Next Silicon Valley' By Dan Breznitz; Mollie Taylor
  15. Self-Employment and Geographical Mobility in Germany By Darja Reuschke

  1. By: Kristian Behrens; Giordano Mion; Yasusada Murata; Jens Südekum
    Abstract: The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We develop and quantify a novel framework to address this question at three different levels: Do spatial frictions matter for the city-size distribution? Do they affect individual city sizes? Do they contribute to the productivity advantage of large cities and the nature of competition in cities? The short answers are: no, yes, and it depends.
    Keywords: trade frictions, urban frictions, productivity, city-size distribution, markups
    JEL: F12 R12
    Date: 2011–12
  2. By: Klaus Nowotny (WIFO); Dieter Pennerstorfer (WIFO)
    Abstract: In this paper we analyse the role of ethnic networks in the location decision of migrants to the EU 15 at the regional level. Using a random parameters logit specification we find a substantially positive effect of ethnic networks on the location decision of migrants. The effect is, however, decreasing in network size. Furthermore, we find evidence of spatial spillovers in the effect of ethnic networks: ethnic networks in neighbouring regions significantly help to explain migrants' choice of target regions. The positive effects of ethnic networks thus also extend beyond regional and national borders. Analysing the trade-off between potential income and network size, we find that migrants would require a sizeable compensation for living in a region with a smaller ethnic network, especially when considering regions where only few previous migrants from the same country of origin are located.
    Keywords: network migration, ethnic networks, random parameters
    Date: 2011–12–19
  3. By: Philipp Mohl (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Tobias Hagen (Frankfurt University of Applied Sciences, Nibelungenplatz 1, D-60318 Frankfurt am Main, Germany.)
    Abstract: Despite its rather broad goal of promoting “economic, social and territorial cohesion”, the existing literature has mainly focused on investigating the Cohesion Policy’s growth effects. This ignores the fact that part of the EU expenditures is directly aimed at reducing disparities in the employment sector. Against this background, the paper analyses the impact of EU structural funds on employment drawing on a panel dataset of 130 European NUTS regions over the time period 1999-2007. Compared to previous studies we (i) explicitly take into account the unambiguous theoretical propositions by testing the conditional impact of structural funds on the educational attainment of the regional labour supply, (ii) use more precise measures of structural funds for an extended time horizon and (iii) examine the robustness of our results by comparing different dynamic panel econometric approaches to control for heteroscedasticity, serial and spatial correlation as well as for endogeneity. Our results indicate that high-skilled population in particular benefits from EU structural funds. JEL Classification: R11, R12, C23, J20.
    Keywords: EU structural funds, dynamic panel models, spatial panel econometrics, regional employment effects.
    Date: 2011–12
  4. By: Basile, Roberto (University of Naples II); Girardi, Alessandro (ISTAT, Rome); Mantuano, Marianna (ISTAT, Rome); Pastore, Francesco (University of Naples II)
    Abstract: Using Local Labour Systems (LLSs) data, this work aims at assessing the effects of sectoral shifts and industry specialization patterns on regional unemployment in Italy over the years 2004-2008, when huge worker reallocation caused by changes in the international division of labour occurred. Italy represents an interesting case study because of the high degree of spatial heterogeneity in local labour market performance and the well-known North-South divide. Furthermore, the presence of strongly specialized LLSs (Industrial Districts, IDs) allows us to test whether IDs perform better than highly diversified urban areas thanks to the effect of agglomeration economies, or vice versa. Building on a semiparametric spatial auto-regressive framework, our empirical investigation documents that sectoral shifts and the degree of specialization exert a negative role on unemployment dynamics. By contrast, highly diversified areas turn out to be characterized by better labour market performances.
    Keywords: unemployment, sectoral shift, diversification, spatial dependence, nonparametrics
    JEL: C14 C21 L16 R23
    Date: 2011–12
  5. By: Brian A’Hearn (Pembroke College, Oxford); Anthony J. Venables (University of Oxford & CEPR)
    Abstract: This paper explores the interactions between external trade and regional disparities in the Italian economy since unification. It argues that the advantage of the North was initially based on natural advantage (in particular the endowment of water, intensive in silk production). From 1880 onwards the share of exports in GDP stagnated and then declined; domestic market access therefore became a key determinant of industrial location, inducing fast growing new sectors (especially engineering) to locate in regions with a large domestic market, i.e. in the North. From 1945 onwards trade growth and European integration meant that foreign market access was the decisive factor; the North had the advantage of proximity to these markets.
    Keywords: industrialisation, market integration, new economic geography, geographic concentration, Italian regions
    JEL: F14 F15 N63 N64 N93 N94 R11 R12
    Date: 2011–10
  6. By: Marie Ferru (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Olivier Bouba-Olga (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers); Dominique Pepin (CRIEF - Centre de Recherche sur l'Intégration Economique et Financière - Université de Poitiers)
    Abstract: The aim of this paper is to provide explanatory elements of the geography of collaboration by testing various potential factors related to the partners' features (sector of activity, location, affiliation to a parent firm, ...) and to the pair of regions involved in the partnership (economic and scientific endowment of regions and proximities that separate them). Based on a database collecting around 15 000 Science‐Industry agreements signed in France between 1981 and 2006, we first realized a probit model that focus on the local dimension of science-industry collaborations on an inter-individual level. We then test a gravity model (sample selection model) in order to explain the probability and the intensity of interregional collaborations.
    Keywords: geography; partnerships; endowment; proximities
    Date: 2011
  7. By: Lundberg, Johan (Department of Economics, Umeå University)
    Abstract: The main issue in this paper is to analyze to what extend academic research at universities and university colleges have any effects on the regional growth pattern. In particular, we analyze the dynamic effects of research activities at universities and university colleges by including the number of dissertations at each university or university college in a Barro and Sala-i-Martin type (Barro and Sala-i-Martin (1992)) of empirical growth model. Moreover, we control for other potentially important determinants of local growth such as local income taxes, local labor market conditions and demographic factors. Based on a data set covering the Swedish municipalities during the period 1990-2007, our results suggests that academic research only have minor effects on the regional growth pattern. One potential explanation for this result is that even though academic research might have a positive effect on economic growth at the national level, the in many respects small municipalities in Sweden where the main part of the universities and university colleges are located do not have the resources in terms of infrastructure needed to fully benefit from academic research.
    Keywords: Net migration; income; convergence; academic research; human capital; spatial effects
    JEL: I23 I25 I28 O15 O38 R11
    Date: 2011–12–22
  8. By: Liwen, Chen (Renmin University of China); Zeng, Xiangquan (Renmin University of China); Yumei, Yang (Renmin University of China)
    Abstract: In this paper, we use Data Envelopment Analysis (DEA) to estimate how well China’s urban areas absorb migrant workers under the interaction of urbanization and industrialization. We applied an output-oriented BCC model to evaluate provincial and regional rural labor absorption efficiency in mainland China. It appears that 4 out of 31 provinces and municipals are efficient, and 2 out of 8 economic regions are efficient in absorbing migrant workers. In the southern and eastern parts of China, urban labor absorption efficiency is higher compared with the western and northern parts of China. Different urbanization patterns and industrial development strategies should be adopted in different economic areas to enhance labor absorption ability in these areas. Urban areas in many parts of China still have potential to accommodate rural migrant workers. The inter-regional flow of production factors would affect urban labor absorption efficiency.
    Keywords: rural labor absorption in urban areas, urbanization, industry structure, DEA
    JEL: J61 R23
    Date: 2011–12
  9. By: Arimoto, Yutaka; Nakajima, Kentaro; Okazaki, Tetsuji
    Abstract: We examine two sources of productivity improvement in the specialized industrial clusters. Agglomeration improves the roductivity of each plant through positive externalities, shifting plant-level productivity distribution to the right. Selection expels less productive plants through competition, truncating distribution on the left. By analyzing the data of the early twentieth century Japanese silk-reeling industry, we find no evidence confirming a right shift in the distribution in clusters or that gglomeration promotes faster productivity growth. These findings imply that the plant-selection effect was the source of higher productivity in the Japanese silk-reeling clusters.
    Keywords: Economic geography, Heterogeneous firms, Selection, Productivity
    JEL: R12 O18 L10
    Date: 2011–12
  10. By: Rafael González-Val (Barcelona Institute of Economics - University of Barcelona, Barcelona); Jose Olmo (Jose Olmo, Centro Universitario de la Defensa & City University London)
    Abstract: This article analyzes empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we implement a threshold nonlinearity test that extends standard linear growth regression models to a dataset on urban, climatological and macroeconomic variables on 1,175 U.S. cities. Our analysis reveals the existence of increasing returns when per-capita income levels are beyond $19; 264. Despite this, income growth is mostly explained by social and locational fundamentals. Population growth also exhibits two distinct equilibria determined by a threshold value of 116,300 inhabitants beyond which city population grows at a higher rate. Income and population growth do not go hand in hand, implying an optimal level of population beyond which income growth stagnates or deteriorates
    Keywords: threshold nonlinearity test, locational fundamentals, multiple equilibria, random growth
    JEL: C12 C13 C33 O1 R0 R11
    Date: 2011–12
  11. By: Kronenberg, Tobias; Többen, Johannes
    Abstract: The political system of Germany is characterized by strong federalist elements, which means that many important decisions of economic policy are made by the governments of the federal states or Länder. Unfortunately the statistical offices of the Länder do not produce regional input-output tables, claiming that they lack the resources (i.e. manpower) to do so. The lack of official input-output tables for the Länder forms a significant obstacle to the study of regional economic developments and hampers the ability of economists to provide well-informed advice to regional policy-makers. A similar situation prevails in many other European countries. This paper attempts to meliorate the situation by describing the process of constructing a regional input-output table (RIOT) for North Rhine-Westphalia (NRW), the largest federal state in terms of GDP and population. A first approximation is produced by applying the CHARM method to the national input-output table on the basis of regional and national employment data. This first approximation is then improved upon by adding additional information from various sources, including the statistical office of NRW and the household survey of income and expenditure. We conclude that it is possible to construct a meaningful RIOT even when resources (time and money) are severely limited if the available information is used in an efficient manner.
    Keywords: regional input-output table; nonsurvey method; hybrid method; location quotient; impact analysis
    JEL: R15 C67
    Date: 2011–12–20
  12. By: Ron Boschma; Pierre-Alexandre Balland; Dieter Kogler
    Abstract: In this paper, we analyze the geography of knowledge spillovers in biotech by investigating the way in which knowledge ties are organized. Following a relational account on knowledge spillovers, we depict knowledge networks as complex evolving structures that build on pre-existing knowledge and previously formed ties. In economic geography, there is still little understanding of how structural network forces (like preferential attachment and closure) shape the structure and formation of knowledge spillover networks in space. Our study investigates the knowledge spillover networks of biotech firms by means of inter-organizational citation patterns based on USPTO biotech patents in the years 2008-2010. Using a Stochastic Actor-Oriented Model (SAOM), we explain the driving forces behind the decision of actors to cite patents produced by other actors. Doing so, we address directly the endogenous forces of knowledge dynamics.
    Keywords: knowledge spillovers, network structure, patent citations, biotech, proximity
    JEL: B15 R11 R12
    Date: 2011–12
  13. By: Wrede, Matthias
    Abstract: Employing a standard matching unemployment model extended by within-labor-market-regions commuting, this paper analyzes the tradeoff between commuting costs and unemployment. Depending on whether commuters are able to bargain for fringe benefits, search may or may not be biased towards distant workplaces and less productive centers. As a consequence, unemployment benefits should be tied to search in high productivity regions. Using German county data, the paper tests some positive predictions that emerge from of the model. In particular, it confirms that increasing labor market tightness reduces the willingness to out-commute. --
    Keywords: unemployment,matching,commuting,search,labor market policy
    JEL: R12 R13 R14 H22
    Date: 2011
  14. By: Dan Breznitz; Mollie Taylor
    Abstract: The importance of social embeddedness in economic activity is now widely accepted. Embeddedness has been shown to be particularly significant in explaining the trajectory of regional development. Nonetheless, most studies of embeddeddness and its impacts have treated each locale as an independent unit. Following recent calls for the study of cross-cluster social interactions, we look at the consistent failure of numerous localities in the United States with high potential to emulate Silicon Valley and achieve sustained success in the ICT industry. The paper contends that the answer lies in high-technology clusters being part of a larger system. Therefore, we must include in our analysis of their social structure the influence of cross-cluster embeddedness of firms and entrepreneurs. These cross-clusters dynamics lead to self-reinforcing social fragmentation in the aspiring clusters and, in time, to the creation of an industrial system in the United States based on stable dominant and subordinate (feeder) clusters. The paper expands theories of industrial clusters, focusing on social capital, networks, and embeddedness arguments, to explain a world with one predominant cluster region. It utilizes a multimethod analysis of the ICT industry centered in Atlanta, Georgia, as an empirical example to elaborate and hone these theoretical arguments.
    Date: 2011
  15. By: Darja Reuschke
    Abstract: Little is known about the individual location behaviour of self-employed entrepreneurs. This paper investigates the geographical mobility behaviour of self-employed entrepreneurs, as compared to employees, thereby shedding new light onto the place embeddedness of self-employment. It examines whether self-employed entrepreneurs are `rooted¿ in place and also whether those who are more rooted in place are more likely to enter self-employment. The paper draws on large-scale panel data covering the years 1996¿2009 from the German Socio-Economic Panel Study (SOEP). It shows that self-employed entrepreneurs as compared to employees are not more `rooted¿ in their place of residence and that those who are more rooted in their place of residence are not more likely to become self-employed. However, in contrast to expectations drawn from previous literature, flows into self-employment are positively associated with inter-regional moves. It concludes that a longitudinal perspective on individual employment careers provides an important methodological advance. In addition, it emphasises the importance of mobility and immobility and individual and household constraints and preferences for understanding who becomes self-employed.
    Keywords: Self-employment, migration, moves, panel data, SOEP, Germany
    JEL: C23 J21 J61 J62 R23
    Date: 2011

This nep-geo issue is ©2012 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.