nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒05‒22
fourteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  2. Analysis of regional endogenous growth By R. Basile; Stefano Usai
  3. The impact of regional industries and universities on (high) technology entrepreneurship By Hülsbeck, Marcel; Kitzinger, Elena N.
  4. Don't stand so close to me: the urban impact of immigration By Antonio Accetturo; Francesco Manaresi; Sauro Mocetti; Elisabetta Olivieri
  5. The home market effect, regional inequality, and intra-industry reallocations By Felbermayr, Gabriel; Jung, Benjamin
  6. Do Credit Associations Put Competitive Pressure on Regional Banks in Japanese Regional Lending Markets? By Kondo, Kazumine
  7. Modelling FDI based on a spatially augmented gravity model: Evidence for Central and Eastern European Countries By Markus Leibrecht; Aleksandra Riedl
  8. Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience By Anthony Briant; Miren Lafourcade; Benoît Schmutz
  9. Restructuring the Italian NHS: a case study of the regional hospital network By Carlo Castellana
  10. A network analysis of cities hosting ICT R&D By Nepelski, Daniel; De Prato, Giuditta
  11. Accounting for Big City Growth in Low Paid Occupations: Immigration and/or Service Class Consumption By Gordon, Ian; Kaplanis, Ioannis
  12. House prices, housing development costs, and the supply of new single-family housing in German counties and cities By Lerbs, Oliver W.
  13. Demand shifting across flights and airports in a spatial competition model By Escobari, Diego; Lee, Sang-Yeob
  14. Cities and Growth: Moving to Toronto - Income Gains Associated with Large Metropolitan Labour Markets By Brown, W. Mark<br/> Newbold, Bruce

  1. By: Marie-Estelle Binet (University of Rennes 1 - CREM (UMR 6211 CNRS)); François Facchini (Centre d'Economie de la Sorbonne, University of Paris 1)
    Abstract: This article tackles one central issue in the regional science literature: the persistence of regional disparities in unemployment within national economies. Our approach is original as Okun’s coefficients are estimated for each of the 22 administrative French regions over the period 1990–2008, taking into account cross-regional disparities in a panel data specification. Estimates show that the coefficients exhibit regional differences. Indeed, Okun’s law is confirmed in fourteen regions, although it does not hold in the other eight regions. Finally, region-specific factors that explain the results that are not significant are identified, and policies to reduce unemployment in French regions are examined.
    Keywords: Okun’s law, regional labour markets, panel data
    JEL: C23 O18 R23
    Date: 2012–04
  2. By: R. Basile; Stefano Usai
    Abstract: Endogenous growth theory has deeply influenced regional growth analyses and inspired regional development policies. Evidence of lack of convergence, club convergence and spatial polarization of per worker income levels has led scholars to question the explanatory power of neoclassical exogenous growth models and to look at endogenous growth theories as proper frameworks to interpret regional development. In particular, those models, which emphasize the role of knowledge spillovers as driving forces for economic growth and identify a large set of self- reinforcing mechanisms that can potentially cause low-productivity traps, have become central in the scientific debate. Only during the last ten years, however, there have been some analytical attempts to regionalize endogenous growth theory. This paper provides a critical survey of the growing literature on regional extensions of endogenous growth analysis. The focus is on those theoretical and empirical studies which have tried to explain lack of regional convergence, multiple equilibria and spatial polarization. The paper also suggests some directions for future research in this field.
    Keywords: Endogenous growth; regional analysis
    JEL: R11 O4
    Date: 2012
  3. By: Hülsbeck, Marcel; Kitzinger, Elena N.
    Abstract: Similar to the creation and distribution of new knowledge through industrial R&D and university research, entrepreneurial activity tends to vary across regions. Therefore the regionalized production of new knowledge is a prerequisite of entrepreneurial innovation. Based on endogenous growth theory, in particular the so-called Griliches-Jaffe-Model of regional knowledge production, we investigate industrial and university characteristics as determinants of technologically oriented entrepreneurship. Using hand-collected data from multiple sources, our results clearly show that high technology entrepreneurship is highly dependent on regional knowledge production by industry and university, while medium technology entrepreneurship does largely not dependent on these factors. --
    Date: 2011
  4. By: Antonio Accetturo (Bank of Italy); Francesco Manaresi (Bank of Italy); Sauro Mocetti (Bank of Italy); Elisabetta Olivieri (Bank of Italy)
    Abstract: We examine the impact of immigration on the residential market within urban areas. We develop a spatial equilibrium model that shows how the effect of an immigrant inflow in a district affects local housing prices through changes in how natives perceive the quality of their local amenities and how this influences their mobility. Predictions of the model are tested using a novel dataset on housing prices and population variables at the district level for a sample of 20 large Italian cities. To address endogeneity problems we adopt an instrumental variable strategy which uses historical enclaves of immigrants across districts to predict current settlements. We find that immigration raises average housing prices at the city level; however it reduces price growth in a district affected by an inflow vis-à-vis the rest of the city. This pattern is driven by the natives&#x2019; flight from immigrant-dense districts towards other areas of the city. These findings are consistent with native preferences to live in predominantly native areas.
    Keywords: migration, housing, spatial segregation
    JEL: R23 J15 R21 F22
    Date: 2012–04
  5. By: Felbermayr, Gabriel; Jung, Benjamin
    Abstract: In New Trade Theory models, the larger region hosts an overproportionate share of producers. This Home Market Effect (HME) exacerbates regional income discrepancies caused by trade frictions or technology differences. With homogeneous firms, it requires inter-industry reallocations to emerge. We present a heterogeneous firms single-sector model with fixed market access costs, in which the HME arises exclusively from empirically more relevant intra-industry reallocations. It is magnified by lower trade costs or higher heterogeneity. In contrast to multi-industry models, a more pronounced HME leads to regional income convergence as adjustment of the firm size distribution counteracts the effects of firmentry. --
    Keywords: Home Market Effect,Regional Inequality,Monopolistic Competition,Heterogeneous Firms,Economic Geography
    JEL: F12 R12
    Date: 2012
  6. By: Kondo, Kazumine
    Abstract: This paper investigates whether credit associations put competitive pressure on regional banks in Japanese regional lending markets. It was found that credit associations pressure regional banks to set lower lending interest rates in regional markets. In addition, the competitive pressure from credit associations in a prefecture whose share of credit associations is more than 20% is much stronger than in a prefecture whose share of credit associations is less than 20%. In particular, regional banks in a prefecture whose share of credit associations is from 25% to 30% experience the strongest pressure.
    Keywords: regional lending markets; regional banks; credit associations; lending interest rates; competitive pressure
    JEL: G21
    Date: 2012–05–13
  7. By: Markus Leibrecht (Department for Economics, Leuphana University Lueneburg, Germany); Aleksandra Riedl (Austrian National Bank)
    Abstract: Based on a spatially augmented gravity model the current paper isolates spatial interrelationships in Foreign Direct Investment (FDI) to Central and Eastern European Countries (CEECs) not only across the destination but also across the origin country dimension of FDI. Results show that: (i) spatial interrelationships across destination countries are present and are consistent with the predom- inance of vertical-complex FDI in total FDI; (ii) spatial correlation across origin countries is given in earlier years of transition, while demonstration and competition effects cancel over the whole sample period; and (iii) agglomeration forces gain in importance for FDI to CEECs.
    Keywords: Foreign Direct Investment, Spatial Econometrics, Central and Eastern Europe, Third country effects
    JEL: C33 F21
    Date: 2012–04
  8. By: Anthony Briant (SG-CIV - Secrétariat Général du Comité Interministériel des Villes - Ministère de la ville); Miren Lafourcade (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, ADIS - Analyse des Dynamiques Industrielles et Sociales - Département d'Economie - Université Paris XI - Paris Sud); Benoît Schmutz (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, ADIS - Analyse des Dynamiques Industrielles et Sociales - Département d'Economie - Université Paris XI - Paris Sud, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)
    Abstract: This paper providesempirical support to the intuitive statement that urban geography matters to the success or failure of place-based public policies, using the French enterprise zone program as a case study. According to the few existing evaluations, this program has only had a small positive average impact on firm and job creation rates. In addition, this impact was shown to be strongly heterogeneous across the treated neighborhoods may account for part of these results. We estimate a series of augmented difference-in-differences models in which we interact the treatment indicator with a series of original indicators of spatial isolation, wich account for severance, peripherality and disconnection to transportation networks within the urban area. Results indicate that isolation does matter to explain spatial differentials in job creation and firm settlement rates across enterprise zones: only accessible neighborhoods were able to draw benefits from tax breaks and social exemptions. moreover, whereas the program mostly worked through a displacement effect on pre-existing firms, we show that urban geography was a clear determinant of the decision to create new firms from scratch.
    Keywords: Enterprise Zones ; Spatial Isolation ; Transportation Accessibility ; Urban Severance
    Date: 2012–05
  9. By: Carlo Castellana
    Abstract: One of the main issues affecting the Italian NHS is the healthcare deficit: according to current agreements between the Italian State and its Regions, public funding of regional NHS is now limited to the amount of regional deficit and is subject to previous assessment of strict adherence to constraint on regional healthcare balance sheet. Many Regions with previously uncontrolled healthcare deficit have now to plan their "Piano di Rientro" (PdR) and submit it for the approval of the Italian Ministry of Economy and Finances. Those Regions that will fail to comply to deficit constraints will suffer cuts on their public NHS financing. A smart Health Planning can make sure health spending is managed appropriately. Indeed a restructuring of the Italian healthcare system has recently been enforced in order to cope for the clumsy regional healthcare balance sheets. Half of total Italian healthcare expenditure is accounted by hospital services which therefore configure as one of the main restructuring targets. This paper provides a general framework for planning a re-engineering of a hospital network. This framework is made of economic, legal and healthcare constraints. We apply the general framework to the particular case of Puglia region and explore a set of re-engineered solutions which to different extent could help solve the difficult dilemma: cutting costs without worsening the delivery of public healthcare services.
    Date: 2012–05
  10. By: Nepelski, Daniel; De Prato, Giuditta
    Abstract: We apply network analysis to study the ICT R&D locations at the city level. We use a dataset on the location and R&D activity of over 3000 R&D centres belonging to 175 MNEs, located in over 1300 cities around the world. The results show that most of the cities have few R&D connections and are grouped into "cliques", linked through network hubs. Hence, not only is the R&D activity concentrated in space, but also the nexus of connections between locations is limited. Asian and Japanese cities are favoured as a source of R&D services, as compared to European or US cities.
    Keywords: Networks; innovation and R&D; globalization; R&D complexity; network
    JEL: M2 O32 M10
    Date: 2012–04–01
  11. By: Gordon, Ian; Kaplanis, Ioannis
    Abstract: Growth of 'global cities' in the 1980s was supposed to have involved an occupational polarisation, including growth of low paid service jobs. Though held to be untrue for European cities, at the time, some such growth did emerge in London a decade later than first reported for New York. The question is whether there was simply a delay before London conformed to the global city model, or whether another distinct cause was at work in both cases. This paper proposes that the critical factor in both cases was actually an upsurge of immigration from poor countries providing an elastic supply of cheap labour. This hypothesis and its counterpart based on growth in elite jobs are tested econometrically for the British case with regional data spanning 1975-2008, finding some support for both effects, but with immigration from poor countries as the crucial influence in late 1990s London. Keywords: regional labour markets; wages; employment; international migration; consumer demand JEL Codes: J21, J23, F22, R12
    Keywords: Mercat de treball, Salaris, Ocupació, Migracions de pobles, Economia regional, Consumidors, 33 - Economia,
    Date: 2012
  12. By: Lerbs, Oliver W.
    Abstract: This paper employs panel data on 413 German counties and cities from 2004 to 2009 to investigate the supply of new single-family housing in local housing markets. New local housing supply is measured by the annual number of construction permits in relation to the existing single-family housing stock. This supply indicator is econometrically related to existing home prices and new housing development costs, which include the costs of housing construction and vacant land in a given location. The results suggest that both higher prices for existing homes and recent increases in development costs are positively associated with local single-family home permit rates. Instead, higher levels of development costs turn out to dampen construction activity. The average local price elasticity of new single-family home supply is considerably less than one, with surprising differences across the urban hierarchy. --
    Keywords: new housing supply,local housing markets,panel data
    JEL: R12 R31 C31
    Date: 2012
  13. By: Escobari, Diego; Lee, Sang-Yeob
    Abstract: This paper investigates the nature of day-to-day competition between flights using a unique panel data set on prices and inventories. We use instrumental variables methods and several spatial autoregressive models (SAR) to estimate price reaction functions. The primary source of product differentiation is departure time. After controlling for flight-specific characteristics and various sources of price dispersion, we find important evidence of demand shifting between competing flights. Most of the shift is being captured by flights scheduled to depart within a 3-hour window. We find no evidence of demand shifting between airports.
    Keywords: Spatial Autoregressive Models; Competition; Demand Shifting; Airlines
    JEL: L93 D4 C21
    Date: 2012–04–17
  14. By: Brown, W. Mark<br/> Newbold, Bruce
    Abstract: This paper examines the process by which migrants experience gains in earnings subsequent to migration and, in particular, the advantage that migrants obtain from moving to large, dynamic metropolitan labour markets, using Toronto as a benchmark. There are two potentially distinct patterns to gains in earnings associated with migration. The first is a step upwards in which workers realize immediate gains in earnings subsequent to migration. The second is accelerated gains in earnings subsequent to migration. Immediate gains are associated with obtaining a position in a more productive firm and/or a better match between worker skills and abilities and job tasks. Accelerated gains in earnings are associated processes that take time, such as learning or job switching as workers and firms seek out better matches. Evaluated here is the expectation that the economies of large metropolitan areas provide workers with an initial productive advantage stemming from a one-time improvement in worker productivity and/or a dynamic that accelerates gains in earnings over time through the potentially entwined processes of learning and matching. A variety of datasets and methodologies, including propensity score matching, are used to evaluate patterns of income gains associated with migration to Toronto.
    Keywords: Population and demography, Labour, Mobility and migration, Wages, salaries and other earnings
    Date: 2012–05–03

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