nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒08‒23
25 papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Regional Income Convergence in Portugal (1991-2002) By Gertrudes S. Guerreiro
  2. Spatial Dichotomies in Indonesia's Regional Development By Yogi Vidyattama
  3. Regional Income Distribution in Portugal By Gertrudes Saúde Guerreiro
  4. Do labour mobility and networks foster geographical knowledge diffusion? The case of European regions By Ernest Miguele; Rosina Moreno
  5. Co-operation over Distance? The Spatial Dimension of Inter-organisational Innovation Collaboration By Anja Dettmann; Sidonia von Proff; Thomas Brenner
  6. Clusters, Convergence, and Economic Performance By Mercedes Delgado; Michael E. Porter; Scott Stern
  8. Agglomeration, Accessibility, and Productivity: Evidence for Urbanized Areas in the US By Daniel Graham; Patricia Melo; David Levinson
  9. Regional Interest Rate Variations: Evidence from the Indonesian Credit Markets By Masagus M. Ridhwan; Henri L.F. de Groot; Piet Rietveld; Peter Nijkamp
  10. Multilevel Approaches and the Firm-Agglomeration Ambiguity in Economic Growth Studies By Frank G. van Oort; Martijn J. Burger; Joris Knoben; Otto Raspe
  11. Comparative Advantage, Scale Economy and Regional Specialization:An Empirical Analysis Based on China’s Industries By Lu, Zheng; Deng, Xiang
  12. Regional variety and employment growth in Italian labour market areas: services versus manufacturing industries By Francesca Mameli; Simona Iammarino; Ron Boschma
  13. Explaining Reurbanization: Empirical Evidence of Intraregional Migration as a Long-term Mobility Decision from Germany By Gesa Matthes
  14. U.S. Micropolitan Area Growth: A Spatial Equilibrium Growth Analysis By Michael , Davidsson; Dan S., Rickman
  15. Comparative Analysis of Regional Input-Output Matrices: the Portuguese case By Elsa Vaz; José Belbute; António Caleiro; Gertrudes Guerreiro; Ana Eduardo
  16. Clusterwettbewerbe: Eine Option für Entwicklungsländer? By Benner, Maximilian
  17. Airports and Urban Growth: Evidence from a Quasi-Natural Policy Experiment By Blonigen, Bruce A.; Cristea, Anca D.
  18. Inovation and the city: Review of the Auckland regional innovation system By Chen, EeMun
  19. The Crisis Sensitivity of European Countries and Regions: Stylized Facts and Spatial Heterogeneity By Stefan P.T. Groot; Jan L. Mohlmann; Harry Garretsen; Henri L.F. de Groot
  20. When spatial equilibrium fails: is place-based policy second best? By Partridge, Mark D.; Rickman, Dan S.; Olfert, M. Rose; Tan, Ying
  21. The Death of Distance Revisited: Cyberplace, Physical and Relational Proximities By Emmanouil Tranos; Peter Nijkamp
  22. Revealed Competition for Greenfield Investments between European Regions By Martijn J. Burger; Bert van der Knaap; Ronald S. Wall
  23. The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs By Mayer, Thierry; Mayneris, Florian; Py, Loriane
  24. Why Has Regional Convergence in the U.S. Stopped? By Ganong, Peter; Shoag, Daniel
  25. Shrinking population and the urban hierarchy By Kim, Ho Yeon

  1. By: Gertrudes S. Guerreiro (University of Évora, Economics Department and CEFAGE-UE)
    Abstract: Our research aims to address the problem of inequality in income distribution from a different perspective than the usual. We intend to verify if geography influences the pattern of inequality, that is, if the standard of living varies from region to region and if, in the process of growth, spatial units in Portugal have been converging in terms of most relevant variables, such as income. We search the answers to these questions by introducing the treatment of convergence between smaller territorial units, the municipalities as individuals. We intend to evaluate convergence or divergence in income growth and test empirically the theoretical hypothesis that ?-convergence, although necessary, is not a sufficient condition for ?-convergence. To study convergence, we use information about GDP and wages for NUTS III regions, and wages for municipalities. We observe spatial dependence between municipalities, so we estimate spatial econometric models to test convergence. With regard to conditional convergence between municipalities, the model most appropriate is the one which includes in the explanatory variables the weight of primary sector employment, leading us to conclude that this variable distinguishes the "steady state" of the small economies. Variables like the activity rate and percentage of active population with higher education also reveal highly significant on the growth of wages, reflecting the different contexts of the labor market at regional level.
    Keywords: Income Distribution; Regional Inequality; Regional Convergence; Spatial Econometrics.
    JEL: C21 E25 R12
    Date: 2012
  2. By: Yogi Vidyattama (NATSEM, University of Canberra)
    Abstract: For many years there has been a debate about the extent to which large spatial gaps in development exist in Indonesia, especially between the eastern and western parts of the country. To contribute to this issue, this study examines the significance of Indonesia’s spatial development distribution using regional GDP per capita and the Human Development Index as development indicators. Although the results from this study confirm that there are clusters of high and low developed areas within Indonesia, clusters of high regional GDP per capita are spreading in mining areas in both eastern and western Indonesia. Nevertheless, the distribution of the HDI confirms to some extent the existence of a spatial development gap in Indonesia.
    Keywords: Regional Indonesia, Regional Development, Spatial Distribution
    Date: 2012–07
  3. By: Gertrudes Saúde Guerreiro (Universidade de Évora, Departamento de Economia and CEFAGE-UE)
    Abstract: Concerns about inequality in income distribution have gained importance, encouraging the various studies that address specially inequality among individuals [see the studies of Rodrigues (1994, 1999 and 2008)]. Our research aims to address the problem of inequality in income distribution from a different perspective and we want to answer questions like if geography influences the pattern of inequality, or if the Portuguese’s standard of living depends on the place of residence, and finally, if the spatial units that make up the Portuguese territory have been converging in terms of income in the process of growth. The aim of this paper is to study the regional income differences among the regions and municipalities of Portugal. Our individuals are the territorial units. We intend to evaluate convergence or divergence in income growth using a static analysis, with conventional measures and other indicators, being aware the regional differences in economic performance. We find a growing inequality between regional incomes over the period 1990-2006. In our view, the distribution of earnings reflects only the actual distribution of economic activity in Portugal, particularly concentrated in the coastal and metropolitan areas of Lisboa and Porto. The economic specialization and level of education among the population of each territorial unit are also, of course, crucial for this asymmetry on earnings.
    Keywords: Income Distribution; Regional Inequality; Regional Convergence; Municipalities;Regional Data.
    JEL: D30 R10
    Date: 2012
  4. By: Ernest Miguele (Economics and Statistics Division, WIPO; AQR-IREA, University of Barcelona.); Rosina Moreno (AQR-IREA, University of Barcelona)
    Abstract: The goal of this paper is twofold: first, we aim to assess the role played by inventors’ cross-regional mobility and networks of collaboration in fostering knowledge diffusion across regions and subsequent innovation. Second, we intend to evaluate the feasibility of using mobility and networks information to build cross-regional interaction matrices to be used within the spatial econometrics toolbox. To do so, we depart from a knowledge production function where regional innovation intensity is a function not only of the own regional innovation inputs but also external accessible R&D gained through interregional interactions. Differently from much of the previous literature, cross-section gravity models of mobility and networks are estimated to use the fitted values to build our ‘spatial’ weights matrices, which characterize the intensity of knowledge interactions across a panel of 269 regions covering most European countries over 6 years.
    Keywords: inventors’ spatial mobility, co-patenting, gravity models, weights matrix, knowledge production function.
    JEL: C8 J61 O31 O33 R0
    Date: 2012–07
  5. By: Anja Dettmann (Working Group on Economic Geography and Location Research, Philipps University Marburg); Sidonia von Proff (Working Group on Economic Geography and Location Research, Philipps University Marburg); Thomas Brenner (Working Group on Economic Geography and Location Research, Philipps University Marburg)
    Abstract: In the literature there is a controversy about the relevance of the spatial dimension in innovation collaboration. We examine the link between the spatial composition of group members and group characteristics which are important for performing innovation projects. To this end, we introduce a social-psychological approach to the field of economic geography. The empirical part is a longitudinal study of 49 inter-organisational innovation groups in Germany. We find that the share of regional partners is rather stable after a funded formation stage. Hence, policy measures aiming at inter-regional collaboration have to be employed at an early stage of group development.
    Keywords: innovation collaboration, collaboration over distance, network formation, Germany
    JEL: L14 R12 O38
    Date: 2012–07
  6. By: Mercedes Delgado; Michael E. Porter; Scott Stern
    Abstract: This paper evaluates the role of regional cluster composition in the economic performance of industries, clusters and regions. On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and “strength” (i.e., relative presence) of related economic sectors. Building on Porter (1998, 2003), we develop a systematic empirical framework to identify the role of regional clusters – groups of closely related and complementary industries operating within a particular region – in regional economic performance. We exploit newly available data from the US Cluster Mapping Project to disentangle the impact of convergence at the region-industry level from agglomeration within clusters. We find that, after controlling for the impact of convergence at the narrowest unit of analysis, there is strong evidence for cluster-driven agglomeration. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting. Industry and cluster level growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. Importantly, we find evidence that new regional industries emerge where there is a strong cluster environment. Our analysis also suggests that the presence of strong clusters in a region enhances growth opportunities in other industries and clusters. Overall, these findings highlight the important role of cluster-based agglomeration in regional economic performance.
    JEL: L26 R11 R30
    Date: 2012–07
  7. By: Antonescu, Daniela (Romanian Academy, National Institute of Economic Research)
    Abstract: Regional convergence is a key objective of cohesion and balanced development at regional level. The existences of regional imbalances do nothing only delay the achievement this objective, requiring the emergence of viable and appropriate measures of the new European context. This article aims to use the appropriate models based on dispersion method (variance) to identify the dynamics and amplitude differences in the level of regional development in European Union and Romania. The results of this research indicate first that EU integration may have enhanced per-capita income convergence processes and second that the disparities between development regions in Romania have growth more rapidly in recent years. These findings may be able to find new tools to reduce income inequalities in next programming period.
    Keywords: Regional disparities, Convergence, Concentration, Distribution analysis
    JEL: R11 R12 F02
    Date: 2012–05
  8. By: Daniel Graham; Patricia Melo; David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: This paper undertakes an empirical analysis with the aim of improving the current understanding of the relationship between labor productivity and urban agglomeration economies across a sample of urbanized areas in the US. Agglomeration economies are represented with driving time measures of employment accessibility to establish a direct account for the link between transport and agglomeration economies. The paper investigates the presence of nonlinearities in the relationship between labor productivity and agglomeration economies, and examines the spatial decay pattern of the effects arising from this relationship. The findings indicate that there is considerable nonlinearity in the relation between productivity and transport induced agglomeration effects, implying that the estimation of country-level aggregate elasticities is likely to misrepresent the actual magnitude of any productivity gains from urban agglomeration. The results also suggest that the magnitude of the productivity-agglomeration effects decays very rapidly with time and is very strong within 20 minutes driving time. This suggests that knowledge spillover externalities are likely to be a very important Marshallian source of agglomeration economies.
    Keywords: agglomeration economies, network accessibility, labor productivity
    JEL: J31 R12 R40
    Date: 2012
  9. By: Masagus M. Ridhwan (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper explores the determinants of regional differences in interest rates based on a simple theoretical model of loan pricing. The model demonstrates how risks, costs, market concentration and scale economies jointly determine the bank's interest rates. Using recent data of the Indonesian local credit markets, we find that regional interest rate variations are positive and significantly affected by the banks' risk factor, the operating costs, and market concentration. Scale economies negatively affect the interest rates. These findings help to explain geographical segmentation in loan markets.
    Keywords: regional capital mobility; loan pricing; interest rates; Indonesia
    JEL: R51 E43 C33
    Date: 2012–07–18
  10. By: Frank G. van Oort (Utrecht University); Martijn J. Burger (Erasmus University Rotterdam); Joris Knoben (Tilburg University); Otto Raspe (Netherlands Environmental Assessment Agency)
    Abstract: See also the publication in <A href="">'Journal of Economic Surveys'</A>, 26(3), 468-91.<p> Empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions. Both localization and urbanization economies are hypothesized to foster agglomeration and growth, but recent meta-analyses of this burgeoning body of empirical research show that the results are ambiguous. Recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space, aggregation, growth definitions, and the functional form of the models applied. Alternatively, in this paper, we argue that ambiguity may be due to a lack of research on firm-level performance in agglomerations. This research is necessary because the theories that underlie agglomeration economies are microeconomic in nature. Hierarchical or multilevel modeling, which allows micro levels and macro levels to be modeled simultaneously, is becoming an increasingly common practice in the social sciences. As illustrated by detailed Dutch data on firm-level productivity, employment growth and firm survival, we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration-firm performance relationship and for addressing spatial, sectoral and cross-level heterogeneity.
    Keywords: agglomeration economies; micro-macro link; multilevel analysis; productivity
    JEL: C21 O18 R1
    Date: 2012–02–16
  11. By: Lu, Zheng; Deng, Xiang
    Abstract: Current empirical studies on regional specialization mainly focused on measurement of China’s overall regional specialization level, while determinants of industrial geographical distribution, namely the regional specialization pattern, are just paid few attentions. This paper analyzed the regional specialization pattern empirically by employing statistical data of China two-digit industries from 1987 to 2007 through estimating a model which takes comparative advantage and scale economy as driven factors of industrial geographical concentration. Conclusions show that the overall regional specialization of Chinese industries increased between 1987 and 2007, however, it decreased obviously in 1990s. And, scale economy rather than comparative advantage arising from production cost is a long-run factor of China’s industrial geographical distribution.
    Keywords: Comparative Advantage Scale Economy Regional Specialization China
    JEL: R30 R12
    Date: 2012–05–20
  12. By: Francesca Mameli (University of Sassari); Simona Iammarino (London School of Economics and Political Science, and Science and Technology Policy Research (SPRU), University of Sussex); Ron Boschma (Utrecht University, Department of Economic Geography)
    Abstract: This paper investigates the effects of different forms of regional sectoral diversity on employment growth of Italian manufacturing and service industries
    Date: 2012–03
  13. By: Gesa Matthes
    Abstract: Following the discussion on reurbanization (changing intra-regional migration patterns), our research project treats transport-related consequences of this spatial development in German city regions. The hypothesis is that reurbanization bears potential to spread environmentally friendly ways of organizing daily mobility – but that the chance of those positive effects might be given away, if policy does not accompany the process adequately. The aim of this project is to assess the current impact of reurbanization on passenger transport in city regions and to find further potential to reduce motorized passenger kilometres in order to deduce first planning approaches. This paper focuses on the question whether a household decides to move or to stay in its current dwelling and also analyses how the results vary in time and space. After having deduced factors on the decision to move, a logistic regression is run on the SOEP-data. The analysis shows that observed differences in time are mainly due to difference in behaviour regarding the factors ‘number of employed persons’ and the event ‘birth’ whereas spatial variation is mainly due to structural differences.
    Keywords: Relocation, move, migration, reurbanization, transport
    JEL: O18 O21 R14 R21
    Date: 2012
  14. By: Michael , Davidsson; Dan S., Rickman
    Abstract: Because micropolitan areas have only relatively recently been defined, little is known about their comparative economic performance. Part of the interest in micropolitan areas stems from the successful ones often growing to become metropolitan areas. This paper examines micropolitan area growth during the 1990s, a period of strong national growth. A spatial equilibrium growth framework and estimated reduced-form regressions containing an extensive number of variables are used to assess the sources of differentials in micropolitan area growth. To varying degrees, at various levels, and through various channels, it is found that household amenity attractiveness, firm location considerations, and housing supply policies, all underlie micropolitan area growth differentials.
    Keywords: Micropolitan; Regional Growth; Amenities
    JEL: R10 R11 R23
    Date: 2012–07–31
  15. By: Elsa Vaz (University of Évora, Department of Economics and CEFAGE-UE); José Belbute (University of Évora, Department of Economics and CEFAGE-UE); António Caleiro (University of Évora, Department of Economics and CEFAGE-UE); Gertrudes Guerreiro (University of Évora, Department of Economics and CEFAGE-UE); Ana Eduardo (University of Évora, Department of Economics)
    Abstract: Portugal is a heterogeneous territory even though it is a small country. Each region has different characteristics, which makes the country as an evident case for the need of an effective cohesion policy leading to a diminishment of regional disparities. In this paper we analyze and assess the methodologies used to build the existing regional input-output (IO) tables for Portugal. The North, Centre and the Algarve IO tables display a similar structure, while the Azores IO table has shown some differences in the structure of its information region, possibly due to their much more specific territorial characteristics. Additionally, the IO table for Beira Interior region has a different structure, which may be explained by the fact that it was published in the early 90s and based on the year 1986.
    Keywords: Input-Output Tables, Portugal, Portuguese Regions.
    JEL: C67 C82 R15
    Date: 2012
  16. By: Benner, Maximilian
    Abstract: Cluster policy has gained remarkable prominence in regional and sectoral structural policy in industrialized countries. Instead of compensating for weaknesses it focuses on strengths in the local and regional economic structure. In Germany, handing out regional development funds in competitions has been tried. This instrument is intended to promote the use of cluster potentials on the local and regional levels. But is this instrument applicable in development policy, too? In this context, some conditions and constraints have to be considered.
    Keywords: cluster; cluster policy; cluster competitions; industrial policy; structural policy; development policy
    JEL: R58 O25 O10 O20 L50 L53 O14
    Date: 2012–08
  17. By: Blonigen, Bruce A.; Cristea, Anca D.
    Abstract: While significant work has been done to examine the determinants of regional development, there is little evidence on the contribution of air services toward this outcome. This paper exploits the unexpected market changes induced by the 1978 Airline Deregulation Act to bring new evidence on the link between airline traffic and local economic growth. Using data for almost 300 Metropolitan Statistical Areas (MSAs) over a two decade time period centered around the policy change, we exploit time variation in long-run growth rates to identify the effects of airline traffic on population, income and employment growth. Our results suggest that air service has a significant positive effect on regional growth, with the magnitude of the effects differing by MSA size and industrial specialization.
    Keywords: airline traffic; urban growth; regional development; Airline Deregulation Act; air transport
    JEL: R1 O18 R4
    Date: 2012–07–26
  18. By: Chen, EeMun (Ministry of Economic Development, New Zealand)
    Abstract: Place matters in innovation. New ideas – and the capability to translate them into innovative goods, services, processes or markets – rely on the sharing of knowledge and resources by a diverse range of players, including firms, suppliers, employees, universities and government research institutes. For this paper, a review was undertaken to examine the extent to which Auckland has all the actors, linkages, inputs and framework conditions required for innovation. A regional innovation system approach was used. The review found that innovation in Auckland is constrained by business and management capability; a general lack of collaboration between business, and between industry and education/research organisations; and a lack of coordinated planning and investment to address the growth needs in areas of competitive strength. A number of recommendations for action are made for central, regional and local government to improve Auckland’s innovation performance, and thus New Zealand’s innovation performance.
    Keywords: regional innovation; innovation system; Auckland
    JEL: O10 O20 R11
    Date: 2012–05–01
  19. By: Stefan P.T. Groot (VU University Amsterdam); Jan L. Mohlmann (VU University Amsterdam); Harry Garretsen (University of Groningen); Henri L.F. de Groot (VU University Amsterdam)
    Abstract: This paper investigates the impact of the recent global recession on European countries and regions. We first present several stylized facts as to the heterogeneous impact of the global recession on individual European countries and regions. We then offer an investigation of three main classes of explanations for spatial heterogeneity in the severity of the crisis. The first is the extent to which countries are integrated in the global economy via financial and trade linkages. A second class of potential explanations is found in differences in the institutional framework of countries. A third possible cause why some countries and notably also regions are more affected than others is differences in their sectoral composition. We show that especially variation in the sectoral composition contributes to the variation in the effects of the current crisis, both at the country level and at the detailed regional level across the EU.
    Keywords: recession; austerity; Europe; spatial heterogeneity
    JEL: E02 E32 E63 F44 O52 R11
    Date: 2011–04–21
  20. By: Partridge, Mark D.; Rickman, Dan S.; Olfert, M. Rose; Tan, Ying
    Abstract: Place-based or geographically-targeted policy has been promoted as a way to help poor regions and the poor people who live there. Yet, such policy has often been attacked by economists as slowing needed economic adjustments, redirecting resources to lower productivity regions, and supporting political agendas rather than economic prosperity. The spatial equilibrium model in particular predicts that people readily move to the locations providing the highest expected utility, suggesting that policy interventions only impede needed adjustments. Given the high mobility of Americans, the spatial equilibrium model should then be most applicable to the US. We review the empirical evidence on whether the spatial equilibrium model applies and find that, even in the United States, people are not as mobile as the model suggests and that economic shocks have rather persistent effects. Although this suggests the potential need for place-based policy, we describe the informational and political economy conditions that need to be met before place-based policy can be effective.
    Keywords: Place-based policy; spatial equilibrium
    JEL: R13 R12
    Date: 2012–07–21
  21. By: Emmanouil Tranos (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper studies the impact of physical distance and different relational proximity types on the formation of the Internet infrastructure. Although there is some anecdotal evidence on the 'end of geography' effect of the Internet, the relationship between physical space and the Internet has not been yet scrutinized. In addition, owing to the network nature of the Internet, the structure of the Internet infrastructure (the cyber-place) cannot be approached in a unidimensional way. Our paper builds upon recent studies in economic geography and relational proximities, and aims to study whether physical distance survives in virtual geography even after controlling for relational proximities. In order to do so, a unique and extensive database with geo-coded IP links is utilized. Based on this, a spatial interaction model with panel data specifications is constructed to study the impact of different types of proximity on the formation of cyber-place. The above analysis is framed by a complex network analysis exercise, which enhances our understanding of the complexity of the Internet infrastructure from a spatial network perspective. Our results indicate that physical distance, but also different relational proximities, have a significant impact on the intensity of the Internet infrastructure, highlighting the spatiality of the Internet.
    Keywords: death of distance; Internet geography; Internet infrastructure; distance; proximities; spatial interaction models
    JEL: C23 H54 L96
    Date: 2012–07–12
  22. By: Martijn J. Burger (Erasmus University Rotterdam); Bert van der Knaap (Erasmus University Rotterdam); Ronald S. Wall (Institute for Housing and Urban Studies, Erasmus University Rotterdam)
    Abstract: In the modern economy, cities are assumed to be in fierce competition over attracting foreign investments in leading sectors of the world economy. Despite the rich theoretical discourse on these 'wars', it remains unclear which territories are competing with each other over which types of investments Combining insights from international economics, international business, and urban systems literature, we develop an indicator to measure revealed competition between territories for investments based on the overlap of investment portfolios of regions. Taking competition for greenfield investments between European regions as a test subject, we identify competitive market segments, derive the competitive threat a region faces from other regions, the competitive threat regions pose to other regions, and the most important market segments in which regions compete. We show that European regions with similar locational endowments pose a fiercer competitive thre at to one another. In addition, regions that are sufficiently large and distinctive, face the smallest average competitive threat from all other regions.
    Keywords: R12; F21; H70
    Date: 2012–07–06
  23. By: Mayer, Thierry; Mayneris, Florian; Py, Loriane
    Abstract: In this paper, we study the impact of a French enterprise zones program---the ``Zones Franches Urbaines'' (ZFUs) policy---on establishments' location decisions. Our empirical analysis is based on a micro-geographic dataset which provides exhaustive information on the location of establishments in France over the period 2000-2007 at the census block level. We use a difference in difference approach combining spatial and time differencing. We also do triple difference estimations, using the fact that targeted urban areas have been selected in different waves over time. Finally, we exploit a discontinuity in the eligibility criteria of the policy as an exogenous source of variation to estimate the impact of the treatment. Our results show that the French ZFU policy has a positive and sizable impact on location choices. However, we also find that the policy mostly generates displacement effects, in particular through relocation of firms from the un-treated to the treated part within municipalities. Finally, the impact is shown to be highly heterogeneous across zones, firms and industries. The overall cost of moving establishments within municipalities is relatively high.
    Keywords: enterprise zones; firm location
    JEL: R12 R38 R58
    Date: 2012–08
  24. By: Ganong, Peter (Harvard University); Shoag, Daniel (Harvard University)
    Abstract: The past thirty years have seen a dramatic decrease in the rate of income convergence across U.S. states. This decline coincides with a similarly substantial decrease in population flows to wealthy states. We develop a model where labor mobility plays a central role in convergence and can quantitatively account for its disappearance. We then link this decline in directional migration to a large increase in housing prices and housing regulation in high-income areas. The model predicts that these housing market changes generate (1) a divergence in the skill-specific economic returns to living in rich places, (2) a decline in low-skilled migration to rich places and continued low-skilled migration to places with high income net of housing costs, (3) a decline in the rate of human capital convergence and (4) continued income convergence among places with unconstrained housing supply. Using Census data, we find support for the first three hypotheses. To test the fourth hypothesis, we develop a new state-level panel measure of housing supply regulations. Using this measure as an instrument for housing prices, we document the central role of housing prices and building restrictions in the end of income convergence.
    JEL: E24 J23 J24 R14 R23 R52
    Date: 2012–06
  25. By: Kim, Ho Yeon
    Abstract: This paper examines whether population shrinkage leads to changes in urban hierarchy in terms of their relative size and function from the standpoint of the new economic geography. We find some salient patterns in which small cities in the agglomeration shadow become relatively bigger as medium industries spill over on them. This appears to be quite robust against a variation in the rate of natural change among cities. Thus, rank-size relationship and the urban hierarchy are partly disrupted as population shrinks. Regarding the welfare of the residents, a lower demand for land initially causes rent to go down, which boosts the utility. However, the illusion is short-lived because markets soon begin to shrink and suppress wages. We also find that it is better to maintain a slow pace of overall population decline in the long-term perspective. More importantly, it is crucial to sustain the relative livability of smaller cities to minimize the overall loss of utility.
    Keywords: South Korea, Economic geography, Population, Urban societies, Local economy, Industry, Population shrinkage, Rank-size rule, Central place theory
    JEL: R12 R23
    Date: 2012–08

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