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on Economic Geography |
| By: | Zierahn, Ulrich |
| Abstract: | The literature on the wage curve provides considerable evidence in favor of a negative relationship between unemployment and wages. It is thus often seen as a refutation of the Harris-Todaro model, who point to a positive relationship. This paper shows that both strands of literature are special cases of a more general approach by combining a New Economic Geography model with monocentric cities and efficiency wages. Whether the relationship is positive or negative depends on the transportation costs between the cities and commuting costs within them. The model helps explain whether and under which conditions the agglomeration of economic activity is associated with higher unemployment and why controls for agglomeration should be included in wage curve regressions. -- |
| Keywords: | New Economic Geography,Urban Economics,Efficiency Wages,Unemployment,Disparities,Regional Migration |
| JEL: | R12 R14 R23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:130&r=geo |
| By: | Gabriel M. Ahlfeldt; Stephen J. Redding; Daniel M. Sturm; Nikolaus Wolf |
| Abstract: | This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical analysis because of stochastic shocks to worker productivity, which yield a gravity equation for commuting flows. To empirically disentangle alternative determinants of location choices, we use Berlin's division and reunification as a source of exogenous variation in the surrounding concentration of economic activity. Using disaggregated data on land prices, workplace employment and residence employment for thousands of city blocks for 1936, 1986 and 2006, we find that the model can account both qualitatively and quantitatively for the observed changes in city structure. |
| Keywords: | Agglomeration, dispersion, density, cities |
| JEL: | N34 O18 R12 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0118&r=geo |
| By: | Marta Foddi; Stefano Usai |
| Abstract: | Europe 2020 strategy and the initiative “Innovation Union” call for a particular attention at the territorial dimension of innovation and knowledge creation. The heterogeneity across regions in their capacity to create knowledge and innovation, but also in their abilities to exploit ideas and technologies available across the European territory, motivates in-depth analyses of the territorial dimension of the knowledge economy. This paper investigates the nature of knowledge production and diffusion among regions in 29 EU countries and tries to assess its effectiveness. The analysis follows a two-step analytical route. Firstly, as a preliminary analysis, we estimate a knowledge production function (Griliches, 1979 and many others) with the usual parametric methods, in order to find out which are the main determinants of knowledge production at the regional level in Europe. Secondly, based on these findings, we apply DEA to assess the degree of efficiency of European regions in their use of internal and external inputs for the production of new knowledge and ideas. This allows to provide a ranking of the innovative performance of EU regions for two points in time, the beginning of the current century and the second part of this decade. Such rankings will be evaluated thanks to the Malmquist productivity index in order to assess the relative importance of its main components. According to the Data Envelopment Analysis, we found further evidence of a dualistic (centre vs periphery) pattern in the regional innovation activities, with the highest efficient territories located in the most central or economically strategic areas of the continent. On the contrary, the application of the Malmquist productivity index shows that productivity dynamics has been extremely differentiated across regions in terms of both magnitude and intrinsic features. We, again, observe important differences between the core and periphery of Europe and most specifically between the countries which are rich and industrialized and form the so called “Old Europe” and those which are relatively poor and have entered the European Union quite recently. |
| Keywords: | innovation; human capital; spatial spillovers; European regions; DEA |
| JEL: | C13 C61 O33 R11 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201221&r=geo |
| By: | Sylvie Charlot; Riccardo Crescenzi; Antonio Musolesi |
| Abstract: | The paper looks at the genesis of innovation in the EU regions in order to shed light on the link between innovative inputs (R&D and Human Capital) and the genesis of economically valuable knowledge. The "traditional" regional Knowledge Production Function (KPF) is innovatively developed in three complementary directions. First, the KPF is "augmented" in order to control for all possible "unobservable" and "immeasurable" time varying factors that influence the genesis of innovation (i.e. localised institutional and relational factors, regional innovation policies). Second, a semi-parametric approach that relaxes any arbitrary assumption on the "shape" of the KPF is adopted. Finally, the assumption of homogeneity in the impact of R&D and Human Capital is relaxed by explicitly accounting for the differences between "core" and "peripheral" regions. The econometric results confirm the importance of accounting for time varying unobserved heterogeneity through the adoption of a "random growth" specification: R&D efforts exert a significant influence on innovation only after controlling for regional specific time varying unobserved factors. In addition the semi-parametric approach uncovers significant threshold effects for both R&D expenditure and Human Capital and highlights a strong complementary between these two factors. However, "core" regions benefit from a persistent advantage in terms of the "productivity" of their innovation inputs. This has important implications for the EU innovation policies at the regional level. |
| Keywords: | Innovation, Regions, Knowledge production function, Europe, Semi-parametric models |
| JEL: | O32 R11 C14 C23 |
| Date: | 2012–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:ceo:wpaper:39&r=geo |
| By: | Berliant, Marcus; Yu, Chi-Ming |
| Abstract: | Canonical analysis of the classical general equilibrium model demonstrates the existence of an open and dense subset of standard economies that possess fully-revealing rational expectations equilibria. This paper shows that the analogous result is not true in urban economies under appropriate modifications for this field. An open subset of economies where none of the modified rational expectations equilibria fully reveals private information is found. There are two important pieces. First, there can be information about a location known by a consumer who does not live in that location in equilibrium, and thus the equilibrium rent does not reflect this information. Second, if a consumer's utility depends only on information about their (endogenous) location of residence, perturbations of utility naturally do not incorporate information about other locations conditional on the consumer's location of residence. Existence of equilibrium is proved. Space can prevent housing prices from transmitting information from informed to uninformed households, resulting in an inefficient outcome. |
| Keywords: | Urban Economics; General Equilibrium; Private Information; Rational Expectations |
| JEL: | R13 D82 D51 |
| Date: | 2012–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41356&r=geo |
| By: | Anping Chen (School of Economics Jinan University); Nicolaas Groenewold (Business School, University of Western Australia) |
| Abstract: | China has promised to cut CO2 emissions per unit of GDP 40-50% by 2020. It is almost certain that the reduction in emissions will have negative effects on the economy; moreover, the effects are likely to differ across regions, given that there is considerable heterogeneity among Chinese regions. These differential regional impacts will affect regional disparities, which are already very substantial and the source of great concern at the highest policy levels. Yet, very little analysis of them has yet been carried out. We help fill this gap by building a small theoretical model involving two regions designed to capture some of the features of the Chinese economy. We incorporate the right to emit CO2 as a factor of production with the national level of permitted emissions set by the national government. The model is solved numerically based on a parameterisation using Chinese data to simulate the effects on the regions of the carbon-reduction. We find that a reduction has regionally differentiated effects on key variables such as income, welfare and output. We also explore the effects of offsetting policies that may be undertaken by governments at both regional and national levels to ameliorate the effects of the carbon reduction. We find that the effects of standard fiscal policies (both regional and national) depend crucially on whether one or both regions are targeted. Welfare changes are often in the opposite direction to output changes. Boosts to productive capacity do better in terms of output but also have “perverse” welfare effects. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:12-14&r=geo |
| By: | Hein Roelfsema; Yi Zhang |
| Abstract: | This paper explores the connection between the external opening of China and differences in innovation across Chinese regions. Controlling for locational advantages and fixed regional characteristics, for the period 1995-2010 overall we find that regions that have increased most the connections to the world market have become more innovative when compared to other regions. By interacting regional characteristics with openness, we find a U-shaped relation between regional income levels and innovation, where both the lower middle-income and the most advanced regions gain from globalization in terms of increased innovation and productivity. In relative terms, the higher middle-income regions gain less from globalization than the other regions. By examining the nature of international activities across regions, we conjecture that differences in the ownership structures of foreign investments and the nature of linkages between foreign and domestic firms are at the hart of this finding, as the higher middle-income regions have higher outsourcing levels and thus benefit less from foreign technology transfers. |
| Keywords: | Globalization, Innovation, Regional Development, China |
| JEL: | F14 F21 F23 O33 O53 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1215&r=geo |
| By: | Brown, W. Mark<br/> Scott, Darren |
| Abstract: | A growing literature has found a positive association between human capital and long-run employment growth across cities. These studies have increased interest in understanding the location choices of university degree-holders, a group often used as a proxy measure of human capital. Based on data from the 2001 Canadian Census of Population, this paper investigates determinants of the location choices of degree- and non-degree-holders. With a multinomial logit model, it tests a series of hypotheses about the differential effects of thick labor markets and amenities on the location choice of these groups across metropolitan and non-metropolitan areas in Canada. |
| Keywords: | Labour, Population and demography, Mobility and migration |
| Date: | 2012–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp1e:2012027e&r=geo |
| By: | Michaela Trax (Mercator School of Management, University of Duisburg-Essen); Stephan Brunow (Institute of Employment Research (IAB)); Jens Suedekum (Mercator School of Management, University of Duisburg-Essen) |
| Abstract: | Using comprehensive data for German establishments (1999-2008), we estimate plant-level production functions to analyze if “cultural diversity” affects total factor productivity. We distinguish diversity in the establishment’s workforce and in the aggregate regional labor force where the plant is located. We find that a larger share of foreign workers –either in the establishment or in the region –does not affect productivity. However, there are strong spillovers associated with the degree of cultural heterogeneity. The aggregate level is, quantitatively, at least as important as the workforce composition inside the establishment. Diversity thus seems to induce externalities beyond the boundaries of a single firm; it improves local business environments. |
| Keywords: | Cultural Diversity, Plant-level Productivity and knowlege Spillovers. |
| JEL: | R23 J21 J31 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2012029&r=geo |
| By: | Dinkelman, Taryn; Schulhofer-Wohl, Sam |
| Abstract: | Evaluations of new infrastructure in developing countries typically focus on direct effects, such as the impact of an electrification program on household energy use. But if new infrastructure induces people to move into an area, other local publicly provided goods may become congested, offsetting the benefit of the infrastructure. We use a simple model to show how to measure the net benefit of a place-based program without data on land prices -- an indicator that is commonly used to measure congestion in developed countries but that often cannot be used in poor countries because land markets are missing or land prices are badly measured. Our model shows that congestion externalities are especially large when land markets are missing. To illustrate, we estimate the welfare impact of a recent household electrification program in South Africa. Congestion externalities from migration reduced local welfare gains by half. |
| Keywords: | congestion effects; migration; program evaluation; rural infrastructure; South Africa; welfare |
| JEL: | H23 H43 H54 O15 O18 R13 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9126&r=geo |
| By: | Brown, W. Mark<br/> Scott, Darren |
| Abstract: | Une litterature de plus en plus abondante fait etat d'une association positive entre le capital humain et la croissance de long terme de l'emploi dans les villes. Ces etudes ont suscite le desir de comprendre ce qui influence les titulaires d'un diplome universitaire, groupe souvent utilise comme mesure indirecte du capital humain, dans leur choix d'un lieu de residence. Fondee sur les donnees du Recensement de la population du Canada de 2001, la presente etude porte sur les determinants du choix du lieu de residence des personnes titulaires d'un diplome universitaire et de celles qui ne le sont pas. Un modele logit multinomial est utilise pour verifier une serie d'hypotheses au sujet des effets differentiels des marches du travail denses et des attraits urbains sur le choix du lieu de residence de ces groupes dans les regions metropolitaines et non metropolitaines au Canada. |
| Keywords: | Travail, Population et demographie, Mobilite et migration |
| Date: | 2012–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp1f:2012027f&r=geo |
| By: | Zierahn, Ulrich |
| Abstract: | The New Economic Geography predicts a positive effect of market access on wages, as represented by the wage equation. Several studies provide empirical evidence in favor of the wage equation. However, a key problem is the endogeneity of market access: it is challenging to identify the causal effects of market access on wages, since market access itself depends on wages. Whereas most approaches rely on instrumental variables and strong assumptions on exogeneity, the present analysis relies on German reunification as an exogenous variation of market access in order to identify the effects. Since the market access shock due to reunification was accompanied by a labor supply shock due to migrants and commuters from eastern Germany, the effects on wages, employment and unemployment are analyzed. The results provide evidence in favor of a labor demand shock due to the increase in market access and a labor supply shock due to migrants and commuters from eastern Germany. -- |
| Keywords: | New Economic Geography,wage equation,market access,natural experiment,differences-in-differences |
| JEL: | F15 R12 R23 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:131&r=geo |