nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒02‒27
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. A Bayesian Spatial Individual Effects Probit Model of the 2010 U.K. General Election By Christa Jensen; Donald Lacombe; Stuart McIntyre
  2. The Size Distribution Across All "Cities": A Unifying Approach By Giesen, Kristian; Suedekum, Jens
  3. Overeducation and spatial flexibility in Italian local labour markets By Giuseppe Croce; Emanuela Ghignoni
  4. Tax competition among local governments: evidence from a property tax reform in Finland By Teemu Lyytikäinen
  5. 温室効果ガス排出規制の地域間CGE分析 By Shirai, Daichi; Takeda, Shiro; Ochiai, Katsuaki
  6. A Regional Human Development Index for Portugal By Rita Silva; Alexandra Ferreira Lopes
  7. Heterogeneity in the Cultural Expenditures of Municipalities Evidence from Italian Data (1998-2006) By Domenico Depalo; Silvia Fedeli
  8. Effects of One-Sided Fiscal Decentralization on Environmental Efficiency of Chinese Provinces By Hang XIONG
  9. Labour Migration in the Enlarged EU: A New Economic Geography Approach By d'Artis Kancs
  10. The Causal Effects of an Industrial Policy By Chiara Criscuolo; Ralf Martin; Henry G. Overman; John Van Reenen
  11. “What attracts knowledge workers? The role of space, social connections, institutions, jobs and amenities” By Ernest Miguélez; Rorina Moreno
  12. Do Unemployed Workers Benefit from Enterprise Zones? The French Experience By Gobillon, Laurent; Magnac, Thierry; Selod, Harris

  1. By: Christa Jensen (Regional Research Institute, Department of Economics, West Virginia University); Donald Lacombe (Regional Research Institute, West Virginia University); Stuart McIntyre (Department of Economics, University of Strathclyde)
    Abstract: The Conservative Party emerged from the 2010 United Kingdom General Election as the largest single party, but their support was not geographically uniform. In this paper, we estimate a hierarchical Bayesian spatial probit model that tests for the presence of regional voting effects. This model allows for the estimation of individual region-specific effects on the probability of Conservative Party success, incorporating information on the spatial relationships between the regions of the mainland United Kingdom. After controlling for a range of important covariates, we find that these spatial relationships are significant and that our individual region-specific effects estimates provide additional evidence of North-South variations in Conservative Party support.
    Keywords: United Kingdom General Election, Bayesian hierarchical modelling, spatial econometrics
    JEL: C11 C21
    Date: 2011–11
  2. By: Giesen, Kristian (University of Duisburg-Essen); Suedekum, Jens (University of Duisburg-Essen)
    Abstract: In this paper we show that the double Pareto lognormal (DPLN) parameterization provides an excellent fit to the overall US city size distribution, regardless of whether "cities" are administratively defined Census places or economically defined area clusters. We then consider an economic model that combines scale-independent urban growth (Gibrat's law) with endogenous city creation. City sizes converge to a DPLN distribution in this model, which is much better in line with the data than previous urban growth frameworks that predict a lognormal or a Pareto city size distribution (Zipf's law).
    Keywords: Zipf's law, Gibrat's law, city size distributions, double Pareto-Lognormal
    JEL: R11 R12 O4
    Date: 2012–02
  3. By: Giuseppe Croce; Emanuela Ghignoni
    Abstract: According to a recent strand of literature this paper highlights the relevance of spatial mobility as an explanatory factor of the individual risk of being overeducated. To investigate the causal link between spatial mobility and overeducation we use individual information about daily home-to-work commuting time and choices to relocate in a different local area to get a job. In our model we also take into account relevant local labour markets features. We use a probit bivariate model to control for selective access to employment, and test the possibility of endogeneity of the decision to migrate. Separate estimations are run for upper-secondary and tertiary graduates. The results sustain the appropriateness of the estimation technique and show a significantly negative impact of the daily commuting time for the former group, as well as, negative impact of the decision to migrate and of the migration distance for the latter one.
    Keywords: Overeducation, Spatial flexibility, Local labour markets, Sample selection bias
    JEL: J21 J61 J62
    Date: 2011–07
  4. By: Teemu Lyytikäinen
    Abstract: This paper uses a Finnish policy intervention to study tax competition among local governments. Changes in the statutory lower limits to the property tax rates are used as a source of exogenous variation to estimate the responses of municipalities to tax rates in their neighbouring municipalities. I do not find evidence of interdependence in property tax rates among Finnish municipalities. The results are in contrast to the earlier empirical literature, using data from other countries, that has mainly found positive interdependence in tax rates. I compare the causal estimates based on the policy change to the commonly used Spatial Lag estimates and Spatial Instrumental Variables estimates, which are based on highly restrictive assumptions. The comparisons suggest that the standard spatial econometrics methods may have a tendency to overestimate the degree of interdependence in tax rates.
    Keywords: Property tax, tax competition, fiscal interaction, instrumental variables, spatial econometrics
    JEL: H71 H20 H77
    Date: 2011–08–31
  5. By: Shirai, Daichi; Takeda, Shiro; Ochiai, Katsuaki
    Abstract: Although many CGE models have already been developed for analyzing the climate policy in Japan, most of them only investigate national level impacts. However, impacts of emissions regulations are likely to vary considerably by region because there are large regional differences in household expenditure pattern and industry structure. To investigate regional impacts of greenhouse gas (GHG) emissions regulations in Japan, we construct a new multi-regional CGE model with 9 regions in Japan and estimate regional GHG emissions. We analyze impacts of 10% reduction of GHG on regional GDP, welfare and production. Our simulation shows that regions with the higher share of energy-intensive industries and thermal power generation incur the larger loss in GDP.
    Keywords: 応用一般均衡分析 地域間産業連関表 日本の温暖化対策 地域経済
    JEL: R13 D58 Q54
    Date: 2011–12–19
  6. By: Rita Silva (ERSAR and ISCTE – IUL); Alexandra Ferreira Lopes (ISCTE - IUL, ISCTE Business School, UNIDE - IUL and CEFAGE-UBI)
    Abstract: In a report from 2008 the Organization for Economic Cooperation and Development came to the conclusion that Portugal is still a country very much marked by regional asymmetries and in need of better regional governance mechanisms and policies. In the face of these conclusions it becomes important to address the issue of constructing an index of regional development for Portuguese regions to better assess the evolution of the differential between regions. We propose a regional human development index for Portugal at the NUTS III level, based on the methodology of the Human Development Index (HDI) from the United Nations Development Programme (UNDP). Results show us a country that has most of the highest ranked NUTS III positioned in the coastline, although some interior NUTS III regions improve their relative positions in the ranking between 2004 and 2008. Additionally to the traditional dimensions of the HDI, we also added two dimensions, that we choose to include, given the main criticisms pointed in the literature to the HDI - governance and environment. Results show some significative differences when we add the environment dimension, but in terms of governance they don't change significantly.
    Keywords: Human Development Index, Regional Asymmetries, Portugal.
    JEL: C43 O15 O18 R11
    Date: 2012
  7. By: Domenico Depalo; Silvia Fedeli
    Abstract: On the basis of a unique dataset referring to all 8,100 Italian municipalities and providing details of their balance-sheets, local governments’ features, socio-demographic and economic indicators, we analyze the determinants of the local cultural expenditures. We exploit the panel nature of the data to explain observable and unobservable heterogeneity. Other than the traditional determinants, we find that per capita cultural expenditures increase with the population size, but decrease with the share of men over total population; immigrants increase local cultural spending only in the long run. The number of years in power of the municipal council also plays a role.
    Keywords: Local public expenditure, cultural expenditure, immigrants, local government choice, Mundlak correction.
    JEL: H72 Z10 C23
    Date: 2011–02
  8. By: Hang XIONG
    Abstract: China's actual fiscal decentralization is one-sided: while public expenditures are largely decentralized, fiscal revenues are recentralized after 1994. One critical consequence of the actual system is the creation of significant fiscal imbalances at sub-national level. This paper investigates empirically effects of fiscal imbalances on environmental performance of Chinese provinces. First, environmental efficiency scores of Chinese provinces are calculated with SFA for the period from 2005 to 2010. Then, these scores are regressed against two fiscal imbalance indicators in a second stage model. Finally, conditional EE scores are calculated. This paper finds that effects of fiscal imbalances on EE are nonlinear and conditional on economic development level. Fiscal imbalances are more detrimental to environment in less developed provinces. These results suggest that the one-sided fiscal decentralization in China may have regressive environmental effects and contribute to regional disparity in terms of sustainable development.
    Keywords: Chinese provinces, Decentralization; Environmental efficiency; SFA
    JEL: R51 H70 Q56
    Date: 2012
  9. By: d'Artis Kancs
    Abstract: The paper studies the impact of migration policy liberalisation on international labour migration in the enlarged EU in a structural NEG approach. The liberalisation of migration policy would induce additional 1.80 - 2.98 percent of the total EU workforce to change their country of location, with most of migrant workers relocating from the East to the West. The average net migration rate is decreasing in the level of integration, suggesting that from the economic point of view no regulatory policy responses are necessary to labour migration in the enlarged EU.
    Keywords: Labour Migration, Economic Integration, Economic Geography, Market Access.
    JEL: F12 F14 F16 J21 J61 L11
    Date: 2011–12–12
  10. By: Chiara Criscuolo; Ralf Martin; Henry G. Overman; John Van Reenen
    Abstract: Business support policies designed to raise productivity and employment are common worldwide, but rigorous micro-econometric evaluation of their causal effects is rare. We exploit multiple changes in the area-specific eligibility criteria for a major program to support manufacturing jobs ("Regional Selective Assistance"). Area eligibility is governed by pan-European state aid rules which change every seven years and we use these rule changes to construct instrumental variables for program participation. We match two decades of UK panel data on the population of firms to all program participants. IV estimates find positive program treatment effect on employment, investment and net entry but not on TFP. OLS underestimates program effects because the policy targets underperforming plants and areas. The treatment effect is confined to smaller firms with no effect for larger firms (e.g. over 150 employees). We also find the policy raises area level manufacturing employment mainly through significantly reducing unemployment. The positive program effect is not due to substitution between plants in the same area or between eligible and ineligible areas nearby. We estimate that "cost per job" of the program was only $6,300 suggesting that in some respects investment subsidies can be cost effective.
    Keywords: industrial policy, regional policy, employment, investment, productivity
    JEL: H25 L52 L53 O47
    Date: 2012–01
  11. By: Ernest Miguélez (Economics and Statistics Division, World Intellectual Property Organization and Faculty of Economics, University of Barcelona); Rorina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: The aim of the present paper is to identify the determinants of the geographical mobility of skilled individuals, such as inventors, across European regions. Their mobility contributes to the geographical diffusion of knowledge and reshapes the geography of talent. We test whether geography, amenities, job opportunities and social proximity between inventors’ communities, and the so-called National System of Innovation, drive in- and out-flows of inventors between pairs of regions. We use a control function approach to address the endogenous nature of social proximity, and zero-inflated negative binomial models to accommodate our estimations to the count nature of the dependent variable and the high number of zeros it contains. Our results highlight the importance of physical proximity in driving the mobility patterns of inventors. However, job opportunities, social and institutional relations, and technological and cultural proximity also play key roles in mediating this phenomenon.
    Keywords: inventors’ mobility, gravity model, amenities, job opportunities, social and institutional proximities, zero-inflated negative binomial, European regions. JEL classification: C8, J61, O31, O33, R0
    Date: 2012–02
  12. By: Gobillon, Laurent (Institut National d’Etudes Demographiques); Magnac, Thierry (University of Toulouse I); Selod, Harris (Institut National de la Recherche Agronomique)
    Abstract: This paper presents an impact evaluation of the French enterprise zone program which was initiated in 1997 to help unemployed workers find employment by granting a significant wage-tax exemption (about one third of total labor costs) to firms hiring at least 20% of their labor force locally. Drawing from a unique geo-referenced dataset of unemployment spells in the Paris region over an extensive period of time (1993-2003), we are able to measure the direct effect of the program on unemployment duration, distinguishing between short- and medium-term effects. This is done by implementing an original two-stage empirical strategy using individual data in the first stage and aggregate data and conditional linear matching techniques in the second stage. We show that although the enterprise zones program tended to "pick winners", it is likely to be cost-ineffective. It had a small but significant effect on the rate at which unemployed workers find a job (which is increased by a modest 3 percent). This effect is localized and significant only in the short run (i.e. at best during the 3 years that follow the start of the policy).
    Keywords: enterprise zone, evaluation of programs, regional policies, unemployment
    JEL: C21 J60 J68 R58
    Date: 2012–02

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.