nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒04‒23
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Business change in Italian regions. A spatial shift-share approach to plant-level data By Giuseppe Espa; Danila Filipponi; Diego Giuliani; Davide Piacentino
  2. Migration, Urbanization and City Growth in China By Nong Zhu; Xubei Luo; Heng-fu Zou
  3. Lock-in or lock-out? How structural properties of knowledge networks affect regional resilience? By Joan Crespo; Raphael Suire; Jérôme Vicente
  4. A conditional directional distance function approach for measuring regional environmental efficiency: Evidence from the UK regions By Halkos, George; Tzeremes, Nickolaos
  5. Empirical evidence on horizontal competition in tax enforcement By José María Durán-Cabré; Alejandro Esteller-Moré; Luca Salvadori
  6. The Regional Distribution of Public Employment: Theory and Evidence By Kessing, Sebastian G.; Strozzi, Chiara
  7. Benchmarking regions: Estimating the counterfactual distribution of labor market outcomes By Fitzenberger, Bernd; Furdas, Marina
  8. Foreign trade, home linkages and the spatial transmission of economic fluctuations in Italy By Valter Di Giacinto
  9. Are there Regional Disparities in Suicide Rates? Quantifying Suicide Rates? Quantifying Suicide Distributions for Queensland, 1990-2007 By Ruth F.G. Williams; D.P. Doessel; Jerneja Sveticic
  10. Evidence from Spatial Correlation of Poverty and Income By Hamaguchi, Nobuaki
  11. Measuring the Impact of Establishment Level Agglomeration on Productivity: Industrial specialization and urbanization effects (Japanese) By KONISHI Yoko; SAITO Yukiko
  13. Improvement of Socio-economic Conditions and Distribution of Consumption Expenditures: Case Study of India's Poverty Decline over Two Decades By Takahiro Ito
  14. Going regional. The effectiveness of different tax-benefit policies in combating child poverty in Spain By Canto, Olga; Adiego, Marta; Ayala, Luis; Levy, Horacio; Paniagua, Milagros
  15. Does fiscal decentralization foster regional investment in productive infrastructure? By Kappeler , Andreas; Solé-Ollé, Albert; Stephan, Andreas; Välilä, Timo
  16. Appraising the breakdown of unequal individuals in large French cities By Pascaline Vincent; Frédéric Chantreuil; Benoït Tarroux
  17. Do fiscal decentralization and government fragmentation affect corruption in different ways? Evidence from a panel data analysis By Nadia Fiorino; Emma Galli; Fabio Padovano
  18. Ethnic Networks and Technical Knowledge Learning in Industrial Clusters By Chung, Yessica C.Y.
  19. Decentralization in China By Jing Jin; Chunli Shen; Qian Wang; Heng-fu Zou

  1. By: Giuseppe Espa; Danila Filipponi; Diego Giuliani; Davide Piacentino
    Abstract: In this paper, a shift-share decomposition analysis of business change at plant-level is applied to Italian regions with reference to the period 2004-2009. In particular, a spatial version of shift-share analysis allows to look not only at the national, industrial mix and regional-shift components, as in traditional approaches, but also at the neighbourhood effect. Additionally, we introduce a novel spatial decomposition which is able to conclude more effectively on the neighbourhood influence. Moreover, the micro-level nature of data allows us to analyse the neighbourhood effect at different spatial levels of aggregation (NUTS-2 and NUTS-3 regions). Some results are worth mentioning. First, the spatial level of aggregation affects heavily the results. Second, we find evidence of neighbourhood advantage in the Southern NUTS-3 regions and opposite results for the Central-Northern NUTS-3 regions. Third, we find evidence of positive industrial mix effects only in the Centre-North of Italy. Finally, results obtained over a shorter time span 2004-2007 confirm our conclusions
    Keywords: Business change, Spatial shift-share, Plant-level data, Italian regions
    JEL: C21 L26 R12
    Date: 2012
  2. By: Nong Zhu; Xubei Luo; Heng-fu Zou
    Abstract: Migration and urbanization have transformed the Chinese economy and society in the past 25 years. This paper intends to explore the determinants of population flows and city growth using a panel data at the provincial level in China. The main findings are: (i) regional disparities of urbanization in China, in particular those between coastal and inland areas, are very significant; (ii) the open-door policy has encouraged urban development in China; (iii) the population of small and medium size cities grows faster than that of large cities; (iv) the role of the secondary and tertiary sectors differs from region to region. In central China, the secondary sector actually serves as the push factor for local urbanization; and in coastal region, however, it is the development of the tertiary sector that pushes urbanization; and (iv) the labor force tends to move to cities with good infrastructures.
    Keywords: regional disparities, migration, urbanization, city growth
    JEL: J61 O18 R23
    Date: 2012
  3. By: Joan Crespo; Raphael Suire; Jérôme Vicente
    Abstract: The paper develops an evolutionary framework of regional resilience with a primary focus on the structural properties of local knowledge networks. After a presentation of the network-based rationales of growth and structuring of clusters, we analyze under which structural conditions a regional cluster can mix short run competitiveness without compromising long run resilience capabilities. We show that degree distribution (the level of hierarchy) and degree correlation (the level of structural homophily) of regional knowledge networks are suited properties for studying how clusters succeed in combining technological lock-in and regional lock-out. We propose a simple model of cluster structuring in order to highlight these properties, and discuss the results on a policy-oriented analysis. We conclude showing that policies for regional resilience fit better with ex ante regional diagnosis and targeted interventions on particular missing links, rather than ex post myopic applications of policies based on an unconditional increase of network relational density.
    Keywords: resilience, clusters, degree distribution, assortativity, regional policy
    JEL: B52 D85 O33 R11 R12
    Date: 2012–04
  4. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper, by using conditional directional distance functions as introduced by Simar and Vanhems [J. Econometrics 166 (2012) 342-354] modifies the model by Färe and Grosskopf [Eur. J. Operat. Res. 157 (2004) 242-245], examines the link between regional environmental efficiency and economic growth. The proposed model using conditional directional distance functions incorporates the effect of regional economic growth on regions’ environmental efficiency levels. The results from the UK regional data reveal that economic growth has a negative effect on regions’ environmental performance up to a certain GDP per capita level, where after that point the effect becomes positive. This indicates the existence of a Kuznets type relationship between the UK regions’ environmental performance and economic growth.
    Keywords: Regional environmental performance; Directional distance function; Conditional measures; U.K. regions
    JEL: R10 Q50 C14 Q56 C60
    Date: 2012–04
  5. By: José María Durán-Cabré (Universitat de Barcelona & IEB); Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Luca Salvadori (Universitat de Barcelona & IEB)
    Abstract: Tax auditing parameters have been largely overlooked by the literature as policy-making instruments of any relevance; however, enforcement strategies are critical elements of the tax burden. In this paper we show that, in a federal framework, tax auditing policies can serve as additional tools for regional interaction. We examine the presence of this interaction by adopting a spatial econometric approach. We employ a time-space recursive model that accounts for sluggish adjustment in auditing policies and obtain results that are congruent with standard theory, corroborating the presence of horizontal competition between regions in their tax auditing policies. We also find that once regional governments acquire legal power, the opaque competition in enforcement policies disappears apparently switching to a more transparent competition in statutory tax parameters.
    Keywords: Tax administration and auditing, fiscal competition, fiscal federalism
    JEL: H71 H77 H83
    Date: 2012
  6. By: Kessing, Sebastian G. (University of Siegen); Strozzi, Chiara (University of Modena and Reggio Emilia)
    Abstract: We analyze the optimal regional pattern of public employment in an information-constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-efficiency trade-off. The optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality within the country. Empirically, using a panel of European regions from 1995-2007, we find evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.
    Keywords: public employment, redistribution, regional inequality, European regions
    JEL: H11 J45 R12
    Date: 2012–03
  7. By: Fitzenberger, Bernd; Furdas, Marina
    Abstract: This paper develops and implements a new benchmarking approach for labor market regions. Based on panel data for regions, we use nonparametric matching techniques to account for observed labor market characteristics and for spatial proximity. As the benchmark, we estimate the counterfactual distribution of labor market outcomes for a region based on outcomes of similar regions. This allows to measure both the rank (relative performance) and the absolute performance based on the actual outcome for a region. Our outcome variable of interest is the hiring rate among the unemployed. We implement different similarity measures to account for differences in labor market conditions and spatial proximity, and we choose the tuning parameters in our matching approach based on a cross-validation procedure. The results show that both observed labor market characteristics and spatial proximity are important features to successfully match regions. Specifically, the modified Zhao (2004) distance measure and geographic distance in logs work best in our applications. Our estimated performance measures remain quite stable over time. --
    Keywords: matching function,regional employment offices,performance measurement,nonparametric matching,conditional quantile positions
    JEL: C14 J68 R50
    Date: 2012
  8. By: Valter Di Giacinto (Bank of Italy)
    Abstract: During the recent global recession both the export-oriented northern Italian regions and those in the far less open South experienced a sharp decline in economic activity. One of the possible explanations is the existence of strong domestic linkages propagating foreign demand shocks from North to South. To assess the scope of the spatial transmission of global and local disturbances across Italian regions, in this paper we specify and estimate a bivariate structural spatial VAR model featuring GDP and foreign exports as endogenous variables. A standard gravity equation approach is implemented to model unobserved domestic regional trade flows, while regional sales on foreign markets are related to global trade fluctuations and local shocks to competitiveness, broken down into a national and an idiosyncratic component. In line with expectations, strong domestic linkages are uncovered on the basis of model estimation results. The latter show that even less export-oriented Italian regions, although broadly unaffected on impact, may eventually experience a sharp output decline following a fall in global trade of the size observed in the recent recession.
    Keywords: panel VAR model, trade linkages, spatial econometrics
    JEL: C21 C33 F14
    Date: 2011–10
  9. By: Ruth F.G. Williams (School of Economics, La Trobe University); D.P. Doessel (The School of History, Philosophy, Religion and Classics, The University of Queensland, St Lucia, Queensland, Australia 4072.); Jerneja Sveticic (Australian Institute for Suicide Research and Prevention (AISRAP), Griffith University, Queensland, Australia 4122.)
    Abstract: The study commences with a question that epidemiology would regard as 'old' viz. whether suicide rates are higher in rural areas or urban areas, and turns to applying an economic technique of analysis to studying regional suicide disparities. Several dispersion measures are applied to time series male and female suicide rates, including economic inequality measures and measures from regional studies. Equations are modelled on these dispersion measurements, establishing the sign on the slope coefficients. It is determined whether regional disparities in Queensland lessened, or increased, in the study period. The interpretations relevant to a regional studies literature are discussed.
    Keywords: suicide, regional disparities, measuring dispersion, economic inequality
    Date: 2012
  10. By: Hamaguchi, Nobuaki
    Abstract: Using the district-level data, we found that even in a relatively poor country like Kenya, ethnic diversity is associated with better economic outcomes at local level. However, we found that income spillovers depend on ethnic similarity. This suggests the influence of ethnic bias through which ethnic diversity may undermine economic efficiency at the national-level, as many crosscountry regressions have pointed out. This result implies, for policy making, that the question of interregional transaction costs cannot be narrowly focused on problems of transportation infrastructure but it is also related with ethnic divisions in African context.
    Keywords: ethnic bias , spatial correlation , regional economy
    Date: 2011–11–14
  11. By: KONISHI Yoko; SAITO Yukiko
    Abstract: This paper investigates the effect of agglomeration on the productivity of manufacturing establishments using data from Japan’s Census of Manufactures. For this purpose, we propose a distance-based index defined for each establishment, rather than one based on data aggregated per administrative unit level, as a measurement of agglomeration. Our index is designed to reflect locational heterogeneity within a region as an administrative unit and avoids biases caused by spatial correlations and other problems associated with segmenting data based on administrative boundaries. In addition, we create two different indices to measure two different types of agglomeration—industrial specialization and urbanization—based on data at the four levels of the Japan Standard Industrial Classification (JSIC). Using these indices, we measure the impact these two phenomena have on labor productivity and total factor productivity (TFP) for various industries categorized as growing, declining, labor intensive, and asset intensive. Our analysis finds a positive correlation between the two agglomeration indices as well as labor productivities and both of the indices. Meanwhile, it shows that TFP values, calculated for establishments with 30 employees or more, are positively correlated with the urbanization index, whereas TFP and the industrial specialization index are uncorrelated in most industries and negatively correlated in some. As an exception, we find some industries for which both the industrial and urbanization indices are positively correlated with TFP, all of them categorized as declining. In some of the industries categorized as growing, no correlation is observed between TFP and agglomeration, whether urbanization or industrial specialization. These findings imply that certain attributions—establishment size, industry type, etc.—can serve as a guide for the government in identifying the effective target of cluster promotion policy.
    Date: 2012–03
  12. By: Somekh, Babak (Department of Economics, University of Haifa)
    Abstract: We demonstrate how firm pricing strategy and determinants of household location can interact to determine city structure. We go beyond previous work on spatial income segregation by endogenizing the tradeoff between households' choice of location and shopping behavior, as well as solving for the firms' optimal pricing strategy in a general equilibrium framework. In this city, consumers and firms live on a continuous line interval. Our model consists of two types of firms; many high-cost perfectly competitive "Corner Stores" located in the Central Business District, and one large low-cost "Superstore", choosing its location and price strategically. We begin by considering a model with homogenous consumers in order to determine the strategy for the Superstore in a spatial model. Then we consider the impact of introducing different income classes to our city structure. We show how the shopping habits of the consumer population, as determined by the relative price of the Superstore and the Corner Stores, can contribute to the various income segregation outcomes described in previous literature. In addition we consider the impact of city income structure on the pricing decision of firms.
    Date: 2012–02–19
  13. By: Takahiro Ito (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: This paper examines how living standards in India have improved over two decades, focusing on the distribution of household-level consumption expenditures. The analysis is conducted using the DiNardo-Fortin-Lemieux (DFL) semi-parametric decomposition method. This method offers two desirable features, which enable us to avoid the traditional pitfalls of (semi-)macro-level poverty analysis. The estimation results indicate that regional heterogeneity in poverty decline is very large, and different regional factors contribute to the poverty decline at different stage of development. From 1983 to 1993/94, regional education (measured by literacy rate) is the main engine of the poverty decline. It accounts for 85% of the total poverty decline in this period. During the following 10 years, the labor market condition has a significant role in reducing poverty. Especially, wage and employment growth in the non-agricultural sector is the key to the improvement of living standards. In addition, agricultural wage employment is still important to reduce poverty in rural areas.
    Keywords: Consumption expenditures, kernel density estimation, poverty, regional development
    JEL: D31 I32 R20
    Date: 2012–03
  14. By: Canto, Olga; Adiego, Marta; Ayala, Luis; Levy, Horacio; Paniagua, Milagros
    Abstract: In recent years, child-related policies in Spain have experienced relevant changes at different government levels. The central government implemented a new universal child benefit at birth and reformed some of the most relevant policies for children living in low income households. Also, many regional governments (Comunidades Autnomas) have implemented their own policies to support families with children with different schemes in terms of design and generosity. All these policies have increased social protection expenditure aimed at families and children in Spain as a whole along the last decade (one of the lowest in the EU). So far, however, little is known about their impact on child poverty in Spain. Making use of the tax-benefit microsimulation model for the European Union EUROMOD this paper simulates the eligibility and receipt of most of the existing monetary child-related policies at all government levels and assesses their real (for central government policies) or potential (for regional policies) effect on the reduction of child poverty in Spain. Our results underline that, even after the introduction of a universal lump-sum benefit for newborns at the central government level in 2007, in aggregate terms, central government tax credits are the main child-related policy in Spain. Results also underline that central government policies have a considerably larger role in reducing poverty risk even if policies in some regions perform best than others. In general, our simulations suggest that regional benefits and tax credits reinforce and complement the focus of central government policies on younger children, who, on the other hand, seem to be less vulnerable to poverty than older children in Spain.
    Date: 2012–03–01
  15. By: Kappeler , Andreas (European Investment Bank); Solé-Ollé, Albert (University of Barcelona); Stephan, Andreas (Jönköping International Business School); Välilä, Timo (European Investment Bank)
    Abstract: The aim of this paper is to analyze the effect of revenue decentralization on the provision of infrastructure at the sub-national level. We estimate the effects of revenue decentralization and earmarked grant financing on the level of sub-national infrastructure investment in 20 European countries over the period 1990-2009. The results are interpreted in light of the predictions of the theory on fiscal federalism. We find that it is sub-national infrastructure investment that increases after revenue decentralization and not investment in redistribution. However, the effect of revenue decentralization is lower the higher the use of earmarked grants to fund infrastructure investment.
    Keywords: Regional investment; fiscal federalism; dynamic panel data
    JEL: C23 H54 H76 H77
    Date: 2012–04–12
  16. By: Pascaline Vincent (Phd student - University of Rennes 1 - CREM (UMR 6211 CNRS)); Frédéric Chantreuil (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Benoït Tarroux (University of Rennes 1 - CREM (UMR 6211 CNRS))
    Abstract: In this paper, we examine the general properties of the Neighbourhood Sorting Index (NSI) introduced by Jargowski (1996) and their intuitive interpretation, illustrating the inverse relation between neighbourhood's homogeneity and segregation. The use of the NSI is illustrated measuring and comparing the segregation in the 30 largest French urban areas from 2000 to 2008.
    Keywords: Measure of Segregation, Residential segregation, Income, City,Neighbourhood Sorting Index
    JEL: D31 D63 O18
    Date: 2012–04
  17. By: Nadia Fiorino (Dipartimento di Sistemi e Istituzioni per l’Economia, Università de l’Aquila); Emma Galli (Dipartimento di Scienze Sociali, Università di Roma “La Sapienza”); Fabio Padovano (CREM-CNRS, Université de Rennes 1 and DIPES, Università Roma Tre)
    Abstract: Are countries characterized by more decentralized fiscal and spending powers less corrupt? Or is a higher degree of government fragmentation a more effective way to deter corruption? Is there any evidence that these alternative ways to enhance government accountability reinforce each other? This paper tries to answer these questions by using several indicators of government fragmentation and fiscal decentralization for a panel of 23 countries in the 1995-2007 time interval. Taken separately, while various measures of government fragmentation do not seem to affect corruption in any significant way, fiscal decentralization measured as fiscal and spending autonomy does seem to reduce corruption. This latter effect is reinforced if fiscal decentralization is combined with a high degree of government fragmentation at the local level. The results appear robust to different specifications of the empirical model.
    Keywords: decentralization, common pool, fiscal autonomy, government fragmentation, corruption
    Date: 2012–03–23
  18. By: Chung, Yessica C.Y.
    Abstract: Using an enterprise-level dataset collected from 234 workshops located in the furniture cluster of the city of Arusha, Tanzania, this paper investigates the mechanisms of technical knowledge exchange that take place in clusters. A knowledge exchange link is defined as any two clustering entrepreneurs who perform similar manufacturing techniques in the production process. The results show that the strength of the ethnic networks of producers has positive effects on acquisition of manufacturing techniques, particularly in skills such as wood-joining, which are mainly influenced by a producer’s own skills rather than production facilities. Using dyadic data analysis, this paper further finds that two producers from the same ethnic minority are more likely to exhibit the same manufacturing techniques compared with two producers from the same ethnic majority. These findings suggest that ethnic networks facilitate knowledge exchange in an industrial cluster, but that this positive externality of the ethnic network effect only takes place in small-sized ethnic groups, and only to the extent that sophisticated facilities are not essential in the knowledge learning processes.
    Keywords: ethnic networks , knowledge learning , industrial cluster , Africa
    Date: 2012–01–24
  19. By: Jing Jin; Chunli Shen; Qian Wang; Heng-fu Zou
    Date: 2012

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.