nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒03‒21
seventeen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Spatial Extent of Agglomeration Economies: Evidence from Three U.S. Manufacturing Industries By Joshua Drucker
  2. Economic integration and regional inequality in Iberia (1900-2000) : a geographical approach By Daniel Tirado; Marc Badia-Miró
  3. Are My Neighbours Ageing Yet? Local Dimensions of Demographic Change in German Cities By Uwe Neumann
  4. Measuring the knowledge base of regional innovation systems in Sweden By Martin, Roman
  5. Regional inflation and industrial structure in monetary union By Nagayasu, Jun
  6. Within-city variation in urban decline: the case of Detroit By Veronica Guerrieri; Daniel Hartley; Erik Hurst
  7. The Spatial Dimension of Trade- and FDI-driven Productivity Growth in Chinese Provinces – A Global Cointegration Approach By Selin Özyurt; Timo Mitze
  8. Railroads and Micro-regional Growth in Prussia By Hornung, Erik
  9. Tax and the city: A theory of local tax competition and evidence for Germany By Janeba, Eckhard; Osterloh, Steffen
  10. Earthquakes and Economic Growth By Peter Simonsen
  11. Structural Estimation and Interregional Labour Migration: Evidence from Japan By Keisuke Kondo; Toshihiro Okubo
  12. Workforce skills across the urban-rural hierarchy By Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
  13. Geography and exporting behavior : evidence from India By Mukim, Megha
  14. Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing? By Burnes, Daria; Neumark, David; White, Michelle J.
  15. Investing in Local Roads for Economic Growth By Llanto, Gilberto M.
  16. Cluster quo vadis? The future of the cluster concept By Koschatzky, Knut
  17. Slow convergence in economies with firm heterogeneity By Erzo G.J. Luttmer

  1. By: Joshua Drucker
    Abstract: The spatial extent of localized agglomeration economies constitutes one of the central current questions in regional science. It is crucial for understanding firm location decisions and for assessing the influence of proximity in shaping spatial patterns of economic activity, yet clear-cut answers are difficult to come by. Theoretical work often fails to define or specify the spatial dimension of agglomeration phenomena. Existing empirical evidence is far from consistent. Most sources of data on economic performance do not supply micro-level information containing usable geographic locations. This paper provides evidence of the distances across which distinct sources of agglomeration economies generate benefits for plants belonging to three manufacturing industries in the United States. Confidential data from the Longitudinal Research Database of the United States Census Bureau are used to estimate cross-sectional production function systems at the establishment level for three contrasting industries in three different years. Along with relevant establishment, industry, and regional characteristics, the production functions include variables that indicate the local availability of potential labor and supply pools and knowledge spillovers. Information on individual plant locations at the county scale permits spatial differentiation of the agglomeration variables within geographic regions. Multiple distance decay profiles are investigated in order to explore how modifying the operationalization of proximity affects indicated patterns of agglomeration externalities and interfirm interactions. The results imply that industry characteristics are at least as important as the type of externality mechanism in determining the spatial pattern of agglomeration benefits. The research methods borrow from earlier work by the author that examines the relationships between regional industrial structure and manufacturing production.
    Date: 2012–01
  2. By: Daniel Tirado; Marc Badia-Miró
    Abstract: This paper studies the evolution of regional inequality in Iberia from 1900 to 2000 from a geographical perspective. For doing that the text presents a new dataset of historical regional GDPs for Spanish NUTS III and Portuguese Historical Districts (HD), synthetic indices of regional inequality and different measures of spatial correlation across regional pc GDPs. The results show that Portuguese and Spanish national economic integration processes initially favored the economic specialization across Iberian regions fostering the divergence in terms of their regional pc GDPs. Notwithstanding, ulterior advances in the integration of national markets and the subsequent first stages in the process of adhesion of these two national economies into the UE coexisted with a progressive reduction in Iberian regional inequality. So, Iberian regional inequality depicts a long term U-shaped evolution. Nevertheless, at the same time, Iberian regional inequality evolution followed a significant geographical pattern. The poorest regions cluster in inland territories of the south and west, with regions belonging to this cluster sited on the two sides of the political border. On the contrary, richest regions cluster along the coasts, especially in the north-east corner of the Iberian Peninsula. Besides, the data show that this pattern was well established in the middle of the XX century, before the reciprocal openness of national markets in the 1980s. In this respect, the adhesion of both economies to the UE in 1986 seems to have just caused an ulterior deepening in this historical pattern
    Keywords: Regional inequality, Market integration, Border regions, New economic geography
    JEL: N93 N94 R11
    Date: 2012–02
  3. By: Uwe Neumann
    Abstract: In the discussion about demographic change, the regional dimension so far has played a subordinate role. Based on municipal data for the period between 1998 and 2008, this paper examines to what extent recent demographic change has affected the population of cities and neighbourhoods, focusing on the largest urban agglomeration in Germany, the Rhine-Ruhr conurbation in North Rhine-Westphalia. The local outcomes of demographic change are modified considerably by regional migration and interrelate closely with regional prosperity. The survey provides a precise outline of the interrelation between basic demographic characteristics and shifts in the composition of neighbourhood populations over the study period. The analysis shows that in the most thriving cities, there is a particularly strong tendency of young adults to separate from other demographic groups. In neighbourhoods where there is no such influx of younger people, particularly in low-density residential areas on the urban fringe, rapid demographic ageing aff ects neighbourhood populations and local economies.
    Keywords: Demographic change; neighbourhoods; segregation; migration
    JEL: J11 R23
    Date: 2012–02
  4. By: Martin, Roman (CIRCLE, Lund University)
    Abstract: Within the literature on innovation systems, there are a growing number of scholars emphasizing the importance of differentiated knowledge bases underlying innovation activities. The existing work on knowledge bases is largely grounded on in-depth case studies; while surprisingly little effort has been done so far to operationalize the concept in a more systematic manner. In this paper, an attempt is made to develop a scheme of analysis to identify the knowledge base of a regional economy. We suggest using occupation data in association with a location quotient analysis, to assess whether a regional economy has a particular strength in one (or more) knowledge bases. To bring the analytical scheme into practice and assess it, we apply it on the county level in Sweden. The results are explained and contrasted with insights on the regional economies taken from secondary sources. We conclude that the proposed scheme of analysis leads to fairly reliable results, and could stimulate further empirical research on differentiated knowledge bases.
    Keywords: differentiated knowledge base; regional innovation system; Sweden
    JEL: O32
    Date: 2012–02–27
  5. By: Nagayasu, Jun
    Abstract: It is often argued that an optimal currency area requires homogeneous regional inflation. However, previous empirical studies point out heterogeneity in sectoral inflation and geographical concentration of industries within a monetary union. It follows that there must be a difference in regional inflation in such a union. We examine this view using regional data from Japan which has experienced a period of rapid change in industrial structure, and show that economic structure is closely related to heterogeneous regional inflation. This study suggests that heterogeneous inflation can be a prevailing and long-lasting phenomenon in a monetary union.
    Keywords: Regional inflation; Monetary union; Optimal currency area; Industrial structure
    JEL: F4 R1 E5
    Date: 2012–03–01
  6. By: Veronica Guerrieri; Daniel Hartley; Erik Hurst
    Abstract: When a city experiences a decline in income or population, do all neighborhoods within the city decline equally? Or do some neighborhoods decline more than others? What are the characteristics of the neighborhoods that decline the most? We answer these questions by looking at what happened to neighborhoods within Detroit as the city experienced a sharp decline in income and population from the 1980s to the late 2000s. We find patterns of changes in income and population that are consistent with the model and empirical patterns of gentrification presented in Guerrieri, Hartley, and Hurst (2011), only playing out in reverse.
    Keywords: Housing ; Demography ; Regional economics ; Detroit (Mich.)
    Date: 2012
  7. By: Selin Özyurt; Timo Mitze
    Abstract: Since the introduction of its “open door” policy in the late 1970s, China has been attracting a growing share of FDI inflows and its international trade integration has advanced considerably. In this study, we take a closer look at the regional growth impact of the Chinese internationalization activity on labour productivity over the period 1979-2006. Our empirical analysis thereby extends the existing empirical literature by considering the likely spatial effects associated with Trade- and FDI-led growth in a dynamic error correction modelling framework. Our results indicate that, in the long-run relationship, regional labour productivity is indeed driven by direct and indirect spatial effects of FDI and trade activity next to further supply side factors such as the regional infrastructure equipment and human capital endowment. Similarly, in the short-run, changes in FDI activity and especially human capital variables are found to matter for the regional growth dynamics.
    Keywords: Trade; FDI; productivity growth; spatial spillovers; China
    JEL: O11 O18 P20 R10
    Date: 2012–01
  8. By: Hornung, Erik (Ifo Institute)
    Abstract: We study the e ect of railroad access on urban population growth. Using GIS techniques, we match triennial population data for roughly 1000 cities in nineteenth-century Prussia to georeferenced maps of the German railroad network. We nd positive short- and long-term e ects of having a station on urban growth for di erent periods during 1840-1871. Causal e ects of (potentially endogenous) railroad access on city growth are identi ed using instrumentalvariable and xed-e ects estimation techniques. Our instrument identi es exogenous variation in railroad access by constructing straight-line corridors between terminal stations. Counterfactual models using pre-railroad growth yield no evidence in support of the hypothesis that railroads appeared as a consequence of a previous growth spurt.
    Keywords: Railroads, Technological Di usion, City Growth, Prussian Economic History
    Date: 2012
  9. By: Janeba, Eckhard; Osterloh, Steffen
    Abstract: Despite the well-developed empirical literature on local tax competition, little is known about the actual spatial structure of inter-municipal competition. Assuming that competition takes place only among neighbours (as in the empirical literature) is at odds with the theoretical approaches where all jurisdictions compete simultaneously. In this paper we use a survey conducted among mayors in the German state of Baden-Württemberg to show that the perceived intensity of competition for firms varies considerably between jurisdictions and can mainly be explained by the size and location of the jurisdiction. Based on these findings, we develop a sequential tax competition model in which urban centres compete with other urban centres and rural jurisdictions in their own neighbourhood. This model predicts that larger jurisdictions do not necessarily rely more on capital taxes; in case they face strong competition with more distant competitors, larger cities even have lower capital taxes. In addition, we discuss how the model compares to a standard simultaneous approach and show that results from our sequential model are in line with trends in local taxation in Baden-Württemberg. --
    Keywords: Local tax competition,survey,intensity of competition,asymmetric tax competition
    JEL: H71 H73 H77
    Date: 2012
  10. By: Peter Simonsen (Institute for Advanced Development Studies)
    Abstract: This study explores the economic consequences of earthquakes. In particular, it is investigated how exposure to earthquakes aects economic growth both across and within countries. The key result of the empirical analysis is that while there are no observable eects at the country level, earthquake exposure signicantly decreases 5-year economic growth at the local level. Areas at lower stages of economic development suer harder in terms of economic growth than richer areas. In addition, the analysis proposes an explanation to the paradox that there is a pronounced negative eect at the regional level while no eect appears at the country level. To this end, the eects of earthquake exposure is investigated not only for the impact zones, but also for areas with an average distance to the epicenter of around 100 km. The results indicate that the decrease in production in one part of a country is (partially) o-set by an increase in production in the surrounding regions.
    Keywords: Economic growth,naturaldisasters,spatial distribution
    JEL: O11 O49 R11 R12
    Date: 2012–01
  11. By: Keisuke Kondo (Graduate School of Economics, Kobe University); Toshihiro Okubo (Faculty of Economics, Keio University)
    Abstract: This paper empirically tests relationships among interregional labour migration, wage, and real market potential (RMP) based on a multi-region economic geography model, which describes bilateral migration flows. We estimate a nonlinear gravity model using manufacturing workers' migration flows across the 47 Japanese prefectures. Estimates of structural parameters enable us to compute key variables of the model: price index, RMP, and real wage. We show that higher RMP regions can offer higher nominal wages. Furthermore, we find that an increase in the relative real wage of a region brings about a net increase in workers into the region.
    Date: 2012–03
  12. By: Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
    Abstract: This paper examines differences in the skill content of work throughout the United States, ranging from densely populated city centers to isolated and sparsely populated rural areas. To do so, we classify detailed geographic areas into categories along the entire urban-rural hierarchy. An occupation-based cluster analysis is then used to measure the types of skills available in the regional workforce, which allows for a broader measure of human capital than is captured by conventional measures. We find that the occupation clusters most prevalent in urban areas—scientists, engineers, and executives—are characterized by high levels of social and resource-management skills, as well as the ability to generate ideas and solve complex problems. By contrast, the occupation clusters that are most prevalent in rural areas—machinists, makers, and laborers—are among the lowest in terms of required skills. These differences in the skill content of work shed light on the pattern of earnings observed across the urban-rural hierarchy.
    Keywords: Demography ; Labor supply ; Population ; Human capital ; Wages ; Rural areas ; Urban economics
    Date: 2012
  13. By: Mukim, Megha
    Abstract: This paper examines locational factors that increase the odds of a firm's entry into export markets and affect the intensity of its participation. It differentiates between two different sources of spillovers: clustering of general economic activity and that of export-oriented activity. It also focuses on the effect of the business environment and that of institutions at the spatial unit of districts in India. The study disentangles the within-industry effect from the within-firm effect. A simple logit specification is used to model the probability of entry. The analysis is based on a panel of manufacturing firms in India, which allows for the introduction of firm-specific controls and a battery of fixed effects. The findings suggest that exporter-specific clustering, general economic agglomeration, and institutional factors affect firms'export behavior.
    Keywords: Microfinance,Transport Economics Policy&Planning,Water and Industry,Economic Theory&Research,E-Business
    Date: 2012–02–01
  14. By: Burnes, Daria (University of California, Irvine); Neumark, David (University of California, Irvine); White, Michelle J. (University of California, San Diego)
    Abstract: We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is higher significantly in jurisdictions with higher sales tax rates. This suggests that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers. We also find that the effect of local sales taxes on big box and anchor store retail employment is larger in county interiors, where residents tend to be captive to local retailers. Finally, fiscal zoning has the opposite effect on manufacturing employment, suggesting that local officials' efforts to attract shopping centers and large stores crowd out manufacturing.
    Keywords: fiscal zoning, sales taxes, retail employment, manufacturing employment
    JEL: R3 R5 J2 H2
    Date: 2012–02
  15. By: Llanto, Gilberto M.
    Abstract: Local road investments work for growth and poverty reduction in local areas. The paper highlights the importance of investing in local roads and directs attention to the critical role of local government units (LGUs) in improving the local road network. Raising additional monies to fund local roads is only partly a solution. Much more will depend on the quality and strength of governance and adherence to good planning, budgeting, and procurement practices in the national government and local government units. This paper identifies what local government units can do to improve local road networks.
    Keywords: Philippines, road network, logistics, local governments, fiscal capacity
    Date: 2011
  16. By: Koschatzky, Knut
    Abstract: Although other regional- and sector-oriented promotional approaches exist alongside cluster promotion, from today's perspective the popularity of the cluster approach appears undiminished. At the global scale, no funding approach is as much discussed and implemented as the cluster concept. It must therefore be assumed that cluster support will still be a central innovation policy approach in the coming years. This view is strengthened by the fact that at present no successor for cluster promotion is apparent in the recent scientific theoretical discussion. Although improvements in the con-ceptual clarity and in the cluster policy approaches are being discussed, a new paradigm at a comparable level (as for instance the concept of innovation systems or also network funding before the diffusion of the cluster approach) is not recognizable. Cluster funding will however in future have to be more specific (and selective) than previously and have to network with other funding levels and funding approaches (e.g. European excellence clusters; promotion of excellence in universities in clusters; collaborative research and network promotion; new (heterogeneous) cooperation models). All empirical evidence shows that successfully operating clusters are characterized by a great diversity of actors and activities. These qualify the cluster as a platform to develop new cooperation forms and partnerships, as well as for further education and training measures, by learning from the experiences gathered in the cluster promotion programmes and building on the interactions in clusters. In this sense, new cooperation forms at the micro level, i.e. between single partners, and at the meso level in regional partnerships are not a substitute, but rather a supplement and extension of cluster promotion. --
    Date: 2012
  17. By: Erzo G.J. Luttmer
    Abstract: This paper presents a simple formula that relates the tail index of the firm size distribution to the aggregate speed with which an economy converges to its balanced growth path. The fact that there are so many firms in the right tail implies that aggregate shocks that permanently destroy employment among incumbent firms, rather than cause these firms to scale back temporarily, are followed by slow recoveries. This is true despite the existence of many rapidly growing firms.
    Date: 2012

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