nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒07‒14
ten papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Inequality aversion, income redistribution and economic geography By Schaeffer, Y.; Charlot, S.
  2. The relationship between city center density and urban growth or decline By Kyle Fee; Daniel Hartley
  3. Wages, rents, unemployment, and the quality of life By Wrede, Matthias
  4. The Competitiveness of Global Port-Cities: The Case of Hamburg, Germany By Olaf Merk; Markus Hesse
  5. The Origins of the Sovereign Debt of Italy: a Common Pool Issue? By L. Mauro; C. Buiatti; G. Carmeci
  6. Internal Migration and its Impact on Reducing Inter-communal Disparities in Chile By Carlos Villalobos Barría
  7. The Rise of the East and the Far East: German Labor Markets and Trade Integration By Dauth, Wolfgang; Findeisen, Sebastian; Suedekum, Jens
  8. Geographic Access Rules and Investments By Bourreau, Marc; Cambini, Carlo; Hoernig, Steffen
  9. Institutions and growth : A simplied theory of decentralization and corruption By Anton Granik; Francesco Saraceno
  10. Decentralization and growth:has the cross-country approach met a dead end? By Pierre Salmon

  1. By: Schaeffer, Y.; Charlot, S.
    Abstract: Standard 'New Economic Geography' (NEG) models assume mobile individuals settle in the region where they can earn the highest real income. But recent economic studies on 'Happiness' have accumulated empirical evidence suggesting most individuals - not just the poor - dislike living in regions where income inequality is high. Using a Krugman-type model,augmented with housing costs, we introduce the notion of 'Local Inequality Aversion' and show how it matters to economic geography. On the one hand, mobile individuals suffer an endogenous regional disamenity - income inequality - which produces an agglomerative (dispersive) force when transport costs are high (low). On the other hand, local inequality aversion is likely to lead to some redistributive transfers which benefit both rich and poor : if so, an increase in aversion intensity favors increased agglomeration.
    JEL: R12 R28 H71
    Date: 2012
  2. By: Kyle Fee; Daniel Hartley
    Abstract: In this paper we contrast the spatial patterns of population density and other demographic changes in growing versus shrinking MSAs from 1980 to 2010. We fi nd that, on average, shrinking MSAs show the steepest drop in population density near the Central Business District (CBD). Motivated by this fact, we explore the connection between changes in population density at the core of the MSA and MSA productivity. We find that changes in near-CBD population density are positively associated with per capita income growth at the MSA-level.
    Keywords: Regional economics ; Urban economics
    Date: 2012
  3. By: Wrede, Matthias
    Abstract: Combining a spatial equilibrium model with a search-matching unemployment model, this paper analyzes the willingness to pay for regional amenities and the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. The results are compared with those obtained from the Rosen-Roback approach. Furthermore, the paper shows that the wage curve is negatively sloped for quasi-linear utility. Specifically, the wage rate increases and the unemployment ratio decreases in response to an increase in the amenity level if the amenity is marginally more beneficial to producers than to consumers. As an illustration of the unemployment-adjusted quality-of-life measure, the quality of life in West German counties is estimated. --
    Keywords: quality of life,residential mobility,unemployment,job search,matching
    JEL: R12 R13 R14 H73 J61 J64
    Date: 2012
  4. By: Olaf Merk; Markus Hesse
    Abstract: This working paper offers an evaluation of the performance of the Port of Hamburg, as well as an analysis of the port?s impact on its territory and an assessment of relevant policies and governance. It examines port performance in the last decade and identifies the principal factors that have contributed to it. In addition, the report studies the potential for synergies between the Hamburg and Bremerhaven ports. The study also considers the effect of these ports on economic and environmental questions. The value added of the port cluster of Hamburg is calculated, and its linkages with other economic sectors and regions in Germany are delineated. Specifically, the paper outlines the impact of the port?s operations, and shows how its activities spill over into other regions. The report also assesses major policies governing the port, as well as transport and economic development, the environment and spatial planning. These policies include measures instituted by the port authority and local, regional and national governments. Governance mechanisms at these different levels are described and analysed. Based on the report?s findings, proposed recommendations aim to improve port performance and increase the positive effects of the port on its territory.
    JEL: D57 L91 R11 R12 R15 R41
    Date: 2012–06–27
  5. By: L. Mauro; C. Buiatti; G. Carmeci
    Abstract: Italy has the third largest public debt of the World in absolute terms and the eighth when it is GDP weighted. In addition, Italy presents the largest and most persistent development gap among its regional economies in the group of the advanced countries. Is there a link between these two facts? We present evidence in favor of a relationship between these two empirical facts by reconstructing the entire dynamics of national public deficit as a weighted sum of four macro regional deficits (Northeast, Northwest, Centre and South) . We show that the ultimate cause of the accumulation of public debt in Italy lies in the extraordinary fiscal imbalance of the Southern regions. We then focus on the determinants of the regional public deficits and their persistence. Thanks to the reconstruction of the regional deficit time series we are able to test empirically many of the several theoretical approaches suggested in the literature, including the geographically dispersed interest approach not yet considered for the Italian case. This approach turns out to be one of the best candidates to account for the size and persistence of Southern regional deficits. The whole evidence suggests the existence of a pork barrel mechanism coupled with a complex geo-political equilibrium that has allowed the Southern regions of Italy to generate deficits so large and persistent that they hoard the entire Italian National debt.
    Keywords: Italian Public Deficit; Italian Public Debt; Common Pool
    JEL: H77 H6
    Date: 2012
  6. By: Carlos Villalobos Barría (Georg-August-Universität Göttingen)
    Abstract: Based on the affirmation that internal migration in Chile has become increasingly less important as an equalizing mechanism for regional disparities, this paper aims to look at the causes of such immobility. The estimation procedure allows for obtaining a non-endogenous potential wage differential which controls for the selectivity process involved in the migration decision (based on observed and unobserved characteristics). This study finds that the productivity differential is the leading factor explaining migration. However, migration not only depends on individual characteristics, but strongly relies on the level of household education. Unfortunately, the initial disadvantages related to the household background determine that the one who faces attractive potential wage differentials is at the same time constrained by its household. The conclusion is that household-related migration costs are a source of inefficiency in labour allocation. Consequently, supporting the infrastructure in the rural economy is not the only way to achieve convergence across the territory. Subsidies aimed to reduce migration costs can be also considered in a framework oriented towards encouraging functional migration flows.
    Keywords: migration, labour earnings , self-selection, labour markets
    JEL: R23 J31 J61
    Date: 2012–07–06
  7. By: Dauth, Wolfgang (Institute for Employment Research (IAB), Nuremberg); Findeisen, Sebastian (University of Zurich); Suedekum, Jens (University of Duisburg-Essen)
    Abstract: We analyze the effects of the unprecedented rise in trade between Germany and "the East" – China and Eastern Europe – in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of "the East" in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.
    Keywords: international trade, import competition, export opportunities, local labor markets, employment, China, Eastern Europe, Germany
    JEL: F16 J31 R11
    Date: 2012–06
  8. By: Bourreau, Marc; Cambini, Carlo; Hoernig, Steffen
    Abstract: We analyze competition between vertically integrated infrastructure operators that provide access in different geographical areas. A regulator may impose a uniform access price, set local access rates, or deregulate access locally. We analyze the impact of these alternative regulatory regimes on network investments. While cost-based access leads to both suboptimal rollout and duplication, uniform access prices bring too much duplication. Deregulation in competitive areas can spur investment and lead to social optimum, or call for continued regulatory intervention, depending on the resulting wholesale equilibrium.
    Keywords: geographical access regulation; infrastructure investment; Next generation networks
    JEL: L51 L96
    Date: 2012–06
  9. By: Anton Granik (Reims Management School); Francesco Saraceno (Observatoire Francais des Conjonctures Economiques Author-Workplace-Postal :69, quai d'Orsay, Paris 75007, France)
    Abstract: This paper aims at giving a theoretical background to the, some- times observed, puzzling inverse correlation between the degree of de- centralization and economic growth. We provide evidence that there is some interaction between decentralization and corruption in ex- plaining growth. Within an endogenous growth model, we analyze the problem of a benevolent central government trying to determine the optimal degree of fiscal decentralization. Specifically, it can pro- duce a public good directly, but inefficiently, or it can delegate some (or all) of the production to more efficient local bureaucrats. In the latter case, however, some resources will be wasted because of corrup- tion and the costs linked to monitoring expenditures. With respect to the benchmark case, then, the possibility of corruption yields both a distorted allocation of resources (insufficient decentralization) and an overall under provision of the public good.
    Keywords: Fiscal federalism, corruption, Endogenous growth, Public Capital, Fiscal policy
    JEL: H1 H2 H4 H7 D73
    Date: 2012–06
  10. By: Pierre Salmon (Université de Bourgogne)
    Abstract: The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across countries. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-country relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across countries, however, does not entail the absence of relations specific to each country. That possibility justifies exploring a second approach. When country specificity is very strong, and in spite of some recent empirical work on single-country data, it is normally difficult to say, for any given country, if there is a relation between its observable decentralization arrangements and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Some episodes, related to the way the people and governments respond to persistent economic underperformance, and the way decentralization arrangements then change, may allow a presumption that, in these cases, the relation exists. That presumption is to be verified by case studies.
    Keywords: decentralization;economic growth;public choice;economic systems;reforms.
    JEL: D72 H70 O40
    Date: 2012–06

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