nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒05‒08
fourteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Productivity Advantages of Large Cities: Distinguishing Agglomeration from Firm Selection By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
  2. Structural Reforms and Regional Convergence By Che, Natasha Xingyuan; Spilimbergo, Antonio
  3. The impact of related variety on regional employment growth in Finland 1993-2006: high-tech versus medium/low-tech By Matté Hartog; Ron Boschma; Markku Sotarauta
  4. INCREASING RETURN TO SMART CITIES By Lööf, Hans; Nabavi, Pardis
  5. Technological Leadership and Sectoral Employment Growth:A Spatial Econometric Analysis for U.S. Counties By Valerien O. Pede; Raymond J.G.M. Florax; Henri L.F. de Groot
  6. Regional Effects of Monetary Policy in Sweden By Svensson, Emma
  7. Coping with Inefficiencies in a New Economic Geography Model By Theresa Grafeneder-Weissteiner; Ingrid Kubin; Klaus Prettner; Alexia Prskawetz; Stefan Wrzaczek
  8. Essai sur les régions et la décentralisation au Maroc By Jellal, Said
  9. Modelling the emergence of spatial patterns of economic activity By Jung-Hun Yang; Dick Ettema; Koen Frenken
  10. Sorting and Local Wage and Skill Distributions in France By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Roux, Sébastien
  11. Reconstruction of the Regional GDP of Portugal, 1890 1980 By Marc Badia- Miro; Jordi Guilera; Pedro Lains
  12. Great Britain's Second-Order City Regions in Recessions, 1978-2010 By Tony Champion; Alan Townsend
  13. Different tourists to different destinations. Evidence from spatial interaction models By Emanuela Marrocu; Raffaele Paci
  14. Localization of Interfirm Transaction Relationships and Industry Agglomeration By NAKAJIMA Kentaro; SAITO Yukiko Umeno; UESUGI Iichiro

  1. By: Combes, Pierre-Philippe (GREQAM, University of Aix-Marseille); Duranton, Gilles (University of Toronto); Gobillon, Laurent (INED, France); Puga, Diego (IMDEA); Roux, Sébastien (DARES French Ministry of Labour)
    Abstract: Firms are more productive on average in larger cities. Two main explanations have been offered: firm selection (larger cities toughen competition, allowing only the most productive to survive) and agglomeration economies (larger cities promote interactions that increase productivity), possibly reinforced by localised natural advantage. To distinguish between them, we nest a generalised version of a tractable firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. Using this prediction, French establishment level data, and a new quantile approach, we show that firm selection cannot explain spatial productivity differences. This result holds across sectors, city size thresholds, establishment samples, and area definitions.
    Keywords: productivity, firm selection, agglomeration, cities
    JEL: C52 R12 D24
    Date: 2012–04
  2. By: Che, Natasha Xingyuan; Spilimbergo, Antonio
    Abstract: Which structural reforms affect the speed the regional convergence within a country? We found that domestic financial development, trade/current account openness, better institutional infrastructure, and selected labor market reforms facilitate regional convergence. However, these reforms have mixed effects on the growth of regions closer to the country’s development frontier. We also document that regional income disparity and average income are inversely correlated across countries so that speeding up regional convergence increases national income. We also present a theoretical model to discuss these results.
    Keywords: economic growth; income inequality; regional convergence; structural reforms
    JEL: J68 O11 O18 O25 O33
    Date: 2012–04
  3. By: Matté Hartog; Ron Boschma; Markku Sotarauta
    Abstract: This paper investigates the impact of related variety on regional employment growth in Finland between 1993 and 2006 by means of a dynamic panel regression model. We find that related variety in general has no impact on growth. Instead, after separating related variety among low-and-medium tech sectors from related variety among high-tech sectors, we find that only the latter affects regional growth. Hence, we find evidence that the effect of related variety on regional employment growth is conditioned by the technological intensity of the local sectors involved.
    Keywords: evolutionary economic geography, Finland, high-tech, regional employment growth, related variety
    JEL: D62 O18 R11
    Date: 2012–05
  4. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The UN estimates that 70% of the world's growing population will live in cities by 2050. How will this affect climate change, economic growth and economic equality? The first conclusion in this paper is that the growing urban population and increased spatial density create opportunities for policy measures that could limit or reduce carbon emissions. Second, the economic importance of technological spillover, human capital externalities and innovation may have become more important over time. Since all these three factors are positively related to proximity, the implication is that the city's economic importance as a growth engine has become even stronger. The final conclusion is that the distribution of the value added will remain skewed also in the more populated and possible more productive cities.
    Keywords: Agglomeration economies; climate change; innovation; growth
    JEL: O18 O31 Q54 Q55 R11
    Date: 2012–04–27
  5. By: Valerien O. Pede (Social Sciences Div., International Rice Research Institute); Raymond J.G.M. Florax (Department of Agricultural Economics, Purdue University, W. Lafayette, IN); Henri L.F. de Groot (USDA:Economic Research Service, Washington, DC)
    Abstract: This paper investigates the determinants of technological catch-up and examines at a refined level of spatial and sectoral aggregation to what extent geographical and/or technological proximity to the technology leader impact regional employment growth. Technological progress is endogenously determined and depends on specialization, competition and diversity. We also allow technological progress to depend on agglomeration economies in proximate regions, and model technological progress by means of a hierarchical process of catch-up to the technology leader. Results indicate that human capital plays a crucial role in promoting sectoral employment growth. The effect of technological distance varies, depending on which sector is considered. Technological distance to the leader shows a positive and significant effect on employment growth in the sectors Construction & Manufacturing, Information & Utilities, and Services. No effect of technological distance was found for Finance & Management, Transportation & Trade, and Natural Resources. The effect of geographical distance to the technology leader on employment growth also varies across sectors. A negative effect is observed for Construction & Manufacturing and Finance & Management, while the effect is positive for Natural Resources and Transportation & Trade, and statistically not different from zero for Information and Utilities and Services.
    Keywords: regional employment growth, technology leadership, space
    JEL: R11 R12 C21 O32 O47
    Date: 2011
  6. By: Svensson, Emma (Department of Economics, Lund University)
    Abstract: This paper investigates the effects on employment in 21 Swedish regions of a monetary policy shock using a VAR model with exogenous foreign variables for the 1993:1-2007:4 period. The regional impulse responses clearly indicate asymmetric effects in which employment falls significantly in some regions, while not changing significantly in others. These differences seem to stem from the interest and exchange rate channel, whereby regions with larger shares of employment in the goods sector and higher export intensity are adversely affected. In addition, there is one group of regions that, surprisingly, see increased employment in response to the same policy shock.
    Keywords: monetary transmission; vector autoregression (VAR); regional differences
    JEL: C32 E52 F41
    Date: 2012–04–28
  7. By: Theresa Grafeneder-Weissteiner; Ingrid Kubin; Klaus Prettner; Alexia Prskawetz; Stefan Wrzaczek
    Abstract: This article introduces a social planner version of a model central to the New Economic Geography for explicitly answering whether the symmetric equilibrium outcome of the decentralized market economy is socially desirable. We find that savings incentives are too weak, resulting in an inefficiently low capital stock and therefore an inadequate number of product varieties. The optimal subsidy and taxation scheme to remedy these distortions resulting from the monopolistic competition structure is shown to be a sales subsidy financed by a lump-sum tax that results in marginal cost pricing. Interestingly, implementing this optimal policy might actually destroy the stability of the symmetric equilibrium and result in unintended agglomeration processes.
    Keywords: New Economic Geography; Constructed Capital Model; Social Planner; Regional Policy; Agglomeration
    Date: 2012–05
  8. By: Jellal, Said
    Abstract: We show that regional reform that was implemented broke with the regime in 1971, namely the economic region. She may have allowed the legislature to build the basis for a effective decentralization in the region. The new law sets the general operation of the new local government includes measures whose symbolic value is certain. It becomes an opportunity to rise from the ashes of important organizations such as the Higher Council of Planning and the Interdepartmental Committee for Planning and is characterized by the role assigned to the judge, judge and judge acts accountable. With the economic region, the regional action did not create a new dynamic may introduce qualitative changes in the evolving relationship between the state and region. On behalf of the complexity and the extent of the actions, the state assigns a Leadership role as the region, lack of monitoring structures, observations, information banks for support decision is placed offside. The new law on the region which is assumed to bring more decentralization, does affect profoundly the relationship between the state and local governments? She will be a draft outline of a horizontal administrative giving more substance to the relationship between local authorities and their association to the exercise of their powers? And the company will open Moroccan Does its territorial diversity for a long time after being turned to a single center? In any event, if regional institutions are required, even in the context of genuine autonomy, respect the fundamental principles of the general laws of the State, the latter, however, should in no way obscure the fact that one hand the spatial planning which is a material condition sine qua non of socio-economic and even political, the whole community is rather local and regional expertise that are still in the state things simple units dislocated in relation to the devolved administrative organization, and other blatant distortions in space, there are social and economic, real, and require therefore a matter of priority interventions concurrently two spaces of power: national and regional levels.
    Keywords: Morocco; regions; decentralization ; reforms
    JEL: R58 O18 P21 R11
    Date: 2012
  9. By: Jung-Hun Yang; Dick Ettema; Koen Frenken
    Abstract: Understanding how spatial configurations of economic activity emerge is important when formulating spatial planning and economic policy. A simple model was proposed by Simon, who assumed that firms grow at a rate proportional to their size, and that new divisions of firms with certain probabilities relocate to other firms or to new centres of economic activity. Simon's model produces realistic results in the sense that the sizes of economic centres follow a Zipf distribution, which is also observed in reality. It lacks realism in the sense that mechanisms such as cluster formation, congestion (defined as an overly high density of the same activities) and dependence on the spatial distribution of external parties (clients, labour markets) are ignored. The present paper proposed an extension of the Simon model that includes both centripetal and centrifugal forces. Centripetal forces are included in the sense that firm divisions are more likely to settle in locations that offer a higher accessibility to other firms. Centrifugal forces are represented by an aversion of a too high density of activities in the potential location. The model is implemented as an agent-based simulation model in a simplified spatial setting. By running both the Simon model and the extended model, comparisons are made with respect to their effects on spatial configurations. To this end a series of metrics are used, including the rank-size distribution and indices of the degree of clustering and concentration.
    Date: 2012–04
  10. By: Combes, Pierre-Philippe (GREQAM, University of Aix-Marseille); Duranton, Gilles (University of Toronto); Gobillon, Laurent (INED, France); Roux, Sébastien (DARES French Ministry of Labour)
    Abstract: This paper provides descriptive evidence about the distribution of wages and skills in denser and less dense employment areas in France. We confirm that on average, workers in denser areas are more skilled. There is also strong over-representation of workers with particularly high and low skills in denser areas. These features are consistent with patterns of migration including negative selection of migrants to less dense areas and positive selection towards denser areas. Nonetheless migration, even in the long run, accounts for little of the skill differences between denser and less dense areas. Finally, we find marked differences across age groups and some suggestions that much of the skill differences across areas can be explained by differences between occupational groups rather than within.
    Keywords: skill distribution, wage distribution, sorting
    JEL: J31 J61 R12 R23
    Date: 2012–04
  11. By: Marc Badia- Miro; Jordi Guilera; Pedro Lains (Universitat de Barcelona)
    Abstract: This methodological study provides estimates of Portuguese regional GDP per capita between 1890 and 1980. These estimates were obtained either by following the Geary and Stark (2002) method for industry or directly from regional production data or proxies thereof where available.
    Keywords: historical statistics, regional gdp, portugal
    JEL: N93 R12 N94
    Date: 2012
  12. By: Tony Champion; Alan Townsend
    Abstract: While it is now accepted that the 2008-09 recession accentuated regional differences in Britain, it is more difficult to identify the role of major cities, especially over a longer time scale. Using previously established methods focussed on employment, this paper assesses the record of nine city regions in the 2008-09 recession, both in its own right and in comparison with the previous two recessions. The 2008-09 recession is found to have impacted the nine city regions less than the previous ones in absolute terms but not in relative terms compared with the London city region or the rest of Britain. Over the whole period from 1978, the paper has found the city regions to be fairly tightly in the grip of national cyclical trends of recession and recovery, but generally performing less resiliently than Britain as a whole. In comparison, London showed appreciably more cyclical behaviour between 1989 and 2002 than at other times, with the most remarkable recovery from recession in this period. The public sector helped the performance of second-order city regions from 1997 to 2010, including the peak of growth rates in city regions and their cores in 1998-2002, but its employment reductions will dominate the prospects for provincial cities for several years to come.
    Keywords: Recession, resilience, employment change, second-order city, city region, Great Britain
    JEL: J21 O18 R11 R12
    Date: 2012–04
  13. By: Emanuela Marrocu; Raffaele Paci
    Abstract: As tourism is becoming one of the most important sources of economic growth at the local level, it is imperative to identify and assess the relevant determinants of tourism flows. This paper investigates this issue by carrying out an econometric analysis based on the origin-destination (OD) spatial interaction models, which fully account for the spatial dependence generally featured by tourism flows. We contribute to the current debate by analyzing the tourism flows for the complete set of 107 Italian provinces (11449 OD flows) in terms of 2009 arrivals. Besides geographical distance, the explanatory variables include both pull and push locations’ characteristics to assess their relative role in determining the distinctive traits of emissiveness and attractiveness for all the provinces. We thus consider income, density, accessibility (low-cost flights, transport infrastructure), a set of cultural (museums) and natural (park areas, coasts, well-preserved beaches) factors and other amenities (renowned restaurants). The main results point out that there is a great deal of spatial correlation induced by neighboring provinces at both origin and destination, which is systematically overlooked if one relies only on the gravity specification. Once one controls for such a complex kind of dependence, most of the explanatory variables exhibit the expected effect, with distance and population density showing a negative impact on tourists’ decisions when choosing a specific destination, while amenities, accessibility and income turn out to be effective determinants of tourism flows.
    Keywords: tourism flows; spatial origin-destination interaction models; product differentiation; amenities; Italy
    JEL: Q26 C21 L83 D12 R11
    Date: 2012
  14. By: NAKAJIMA Kentaro; SAITO Yukiko Umeno; UESUGI Iichiro
    Abstract: Using a unique dataset of more than 140,000 manufacturing firms in Japan containing information on their suppliers and customers, this paper looks at the physical distances between transaction partners to examine the localization of transaction relationships. We find the following. First, based on a counterfactual that controls for the location of firms and their potential partners, transaction relationships in about 90%-95% of the 150 three-digit manufacturing industries can be labeled as localized at distances of 40km or less. This indicates that physical distance is a key factor in firms' choice of transaction partners. Second, based on a counterfactual that controls for the average distance of transaction relationships in the manufacturing sector as a whole, we find that about 40% of industries transaction relationships are localized at short distances not exceeding 40km. Third, the extents of industrial localization and localization of transaction relationships are positively correlated. However, there are a number of exceptions, for which we provide potential explanations.
    Date: 2012–04

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