nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒09‒30
twenty papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Human capital mobility and convergence : a spatial dynamic panel model of the German regions By Kubis, Alexander; Schneider, Lutz
  2. Research Productivity and the Quality of Interregional Knowledge Networks By Tamás Sebestyén; Attila Varga
  3. The Competitiveness of Global Port-Cities: The Case of Helsinki - Finland By Olaf Merk; Olli-Pekka Hilmola; Patrick Dubarle
  4. Profiles of local growth and industrial change : facts and an explanation By Dauth, Wolfgang; Südekum, Jens
  5. What makes cities more competitive ? spatial determinants of entrepreneurship in India By Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
  6. Ports and Regional Development: A European Perspective By Claudio Ferrari; Olaf Merk; Anna Bottasso; Maurizio Conti; Alessio Tei
  7. The impact of inter-municipal cooperation on local public spending By Quentin Frère; Matthieu Leprince; Sonia Paty
  8. Intergovernmental Fiscal Relations: the Efficiency Effect of Taxes, Transfers and Fiscal Illusion By Julio López-Laborda; Antoni Zabalza
  9. How Different Are the Wage Curves for Formal and Informal Workers? Evidence from Turkey By Baltagi, Badi H.; Baskaya, Yusuf Soner; Hulagu, Timur
  10. Identifying Regional Labor Demand Shocks Using Sign Restrictions By Juessen, Falko; Linnemann, Ludger
  11. Moving to Segregation: Evidence from 8 Italian Cities By Boeri, Tito; De Philippis, Marta; Patacchini, Eleonora; Pellizzari, Michele
  12. On the Political Determinants of Intergovernmental Grants in Decentralized Countries: The Case of Spain By Pablo Simón-Cosano; Santiago Lago-Peñas; Alberto Vaquero
  13. Spatial fragmentation of industries by functions By Franz-Josef Bade; Eckhardt Bode; Eleonora Cutrini
  14. Housing markets and residential segregation: impacts of the Michigan school finance reform on inter- and intra-district sorting By Rajashri Chakrabarti; Joydeep Roy
  15. Delivering Local Development Review to Assess the Efficiency of the Regional Development Agencies Integrated Network of the Slovak Republic By Debra Mountford; Greg Clark; Peter Dupej; Mateu Hernández; Joe Huxley
  16. Do reservation wages react to regional unemployment? By Blien, Uwe; Messmann, Susanne; Trappmann, Mark
  17. Do Households Use Homeownership To Insure Themselves? Evidence Across U.S. Cities By Jonathan Halket; Michael Amior
  18. Spatial Propagation of the Economic Impacts of Bombing: The Case of the 2006 War in Lebanon By Eduardo A. Haddad; Yasuhide Okuyama
  19. Cultural Diversity and Plant‐Level Productivity By Trax, Michaela; Brunow, Stephan; Suedekum, Jens
  20. Industrial Clustering Policy and Economic Restructuring in Vietnam By Pham, Thi Thanh Hong; Nguyen, Binh Giang

  1. By: Kubis, Alexander (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Schneider, Lutz
    Abstract: "Since the fall of the iron curtain in 1989, the migration deficit of the Eastern part of Germany has accumulated to 1.8 million people, which is over 10 percent of its initial population. Depending on their human capital endowment, these migrants might either - in the case of low-skilled migration - accelerate or - in high-skilled case - impede convergence. Due to the availability of detailed data on regional human capital, migration and productivity growth, we are able to test how geographic mobility affects convergence via the human capital selectivity of migration. With regard to the endogeneity of the migration flows and human capital, we apply a dynamic panel data model within the framework of ß-convergence and account for spatial dependence. The regressions indicate a positive, robust, but modest effect of a migration surplus on regional productivity growth. After controlling for human capital, the effect of migration decreases; this decrease indicates that skill selectivity is one way that migration impacts growth." (Author's abstract, IAB-Doku) ((en))
    Keywords: Binnenwanderung, Qualifikationsniveau, regionale Disparität, Konvergenz, Zuwanderung, Abwanderung, Ostdeutschland, Westdeutschland, Bundesrepublik Deutschland
    JEL: R23 R11 C23
    Date: 2012–09–24
  2. By: Tamás Sebestyén (Department of Economics and Regional Studies, University of Pécs); Attila Varga (Department of Economics and Regional Studies, University of Pécs)
    Abstract: This paper estimates the impact of interregional knowledge flows on the productivity of research at the regional level. We develop the novel index of ’ego network quality’ in order to measure the value of knowledge that can be accessed from a particular region’s global knowledge network. Quality of interregional knowledge networks is related to the size of knowledge accumulated by the partners (‘knowledge potential’), the extent of collaboration among partners (‘local density’) and the position of partners in the entire knowledge network (‘global embeddedness’). Ego network quality impact on the productivity of research in scientific publications and patenting at the regional level is tested with co-patenting and EU Framework Program collaboration data for 189 European NUTS 2 regions.
    Keywords: patents, scientific publications, knowledge networks, R&D productivity, regional knowledge production function, European regions
    JEL: O33 R11 R58
    Date: 2012–06
  3. By: Olaf Merk; Olli-Pekka Hilmola; Patrick Dubarle
    Abstract: This working paper offers an evaluation of the performance of the Port of Helsinki, as well as an analysis of the port?s impact on its territory and an assessment of relevant policies and governance. It examines declining 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 Helsinki and HaminaKotka ports. The study also considers the effect of these ports on economic and environmental questions. Specifically, the paper outlines the impact of the Helsinki 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 Helsinki 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.
    Keywords: transportation, ports, regional development, regional growth, urban growth, inter-regional trade
    JEL: D57 L91 R11 R12 R15 R41
    Date: 2012–09–11
  4. By: Dauth, Wolfgang (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Südekum, Jens
    Abstract: "In this paper we take a detailed look at the sectoral anatomy of regional growth in German regions over the period 1978-2008. In the aggregate, the German economy is characterized by a secular decline of the manufacturing sector and a rise of the modern service economy. This trend of structural change (Petty's law) by no means occurs uniformly across space, however. Some regions exhibit this trend even at an accelerated pace, while other regions develop their local economic structures against the trend and expand their manufacturing bases. We first develop a novel empirical approach that allows us to categorize all German regions into one out of three groups with 'pro-trend', 'anti-trend' or 'featureless' regional growth. Afterwards we show that the differential exposure to international trade is an important cause of the divergent patterns of local industrial change." (Author's abstract, IAB-Doku) ((en))
    Keywords: Wirtschaftsstrukturwandel, regionale Verteilung, Welthandel, lokale Ökonomie, Beschäftigungsentwicklung, Wirtschaftsentwicklung, Wirtschaftssektoren
    JEL: R11 F16
    Date: 2012–09–17
  5. By: Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D.
    Abstract: Policy makers in both developed and developing countries want to make cities more competitive, attract entreprepreneurs, boost economic growth, and promote job creation. The authors examine the spatial location of entrepreneurs in India in manufacturing and services sectors, as well as in the formal and informal sectors, in 630 districts spread across 35 states/union territories. They quantify entrepreneurship as young firms that are less than three years old, and define entry measures through employment in these new establishments. They develop metrics that unite the incumbent industrial structures of districts with the extent to which industries interact through the traditional agglomeration channels. The two most consistent factors that predict overall entrepreneurship for a district are its education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. These relationships are much stronger in India than those found for the United States. The authors also find strong evidence of agglomeration economies in India's manufacturing sector. This influence is through both traditional Marshallian economies like a suitable labor force and proximity to customers and through the Chinitz effect that emphasizes small suppliers. India's footprints in structural transformation, urbanization, and manufacturing sector are still at an early stage. At such an early point and with industrial structures not yet entrenched, local policies and traits can have profound and lasting impacts by shaping where industries plant their roots.
    Keywords: Microfinance,Labor Markets,Labor Policies,Private Participation in Infrastructure,Small Scale Enterprise
    Date: 2012–09–01
  6. By: Claudio Ferrari; Olaf Merk; Anna Bottasso; Maurizio Conti; Alessio Tei
    Abstract: This paper studies the impact of port activity on regional employment, analysing approximately 560 western European regions, including the largest OECD European ports (116 ports), from 2000-06. The empirical analysis is based on a set of employment equations using the Blundell and Bond (1998) GMM-System estimator that takes into account persistence effects in employment, regional unobserved time-invariant heterogeneity and endogeneity of port activity.<P> Our main findings are (1) regional employment is positively correlated to port throughput, while the number of passengers is not; (2) the impact of port throughput on employment might depend on the institutional characteristics of each port, with private ports having the largest impact on regional employment of the host region if compared with those operating under different governance models (“Hanseatic”, “Latin”); (3) there is a higher impact of port throughput when liquid bulk is not considered; and (4) the main results are confirmed when service and manufacturing employment rather than total employment are considered.
    Keywords: transportation, ports, regional development, regional growth
    JEL: H54 L91 O47 R11 R41
    Date: 2012–09–11
  7. By: Quentin Frère (CESAER - Centre d'Economie et Sociologie appliquées à l'Agriculture et aux Espaces Ruraux - INRA); Matthieu Leprince (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen Basse-Normandie); Sonia Paty (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: The purpose of this paper is to assess the effects of inter-municipal fiscal cooperation on municipal public spending, based on the French experience. We estimate a model of municipal spending choice using panel data and spatial econometrics for municipalities over the period 1994-2003. We provide two main results. First, inter-municipal cooperation has no significant impact on the level of municipal public spending, which suggests that cooperation does not achieve its goal of reducing municipal spending by the sharing of local responsibilities. Second, there are no spending interactions between municipalities belonging to the same inter-municipal community. This is in line with the goal assigned to cooperation in terms of internalization of spatial externalities. However, our results show that benefit spillovers remain highly significant outside inter-municipal communities, suggesting that inter-municipal communities remain too small.
    Keywords: public spending ; local governments ; inter-municipal cooperation ; panel data
    Date: 2012–09–11
  8. By: Julio López-Laborda (Department of Public Economics, University of Zaragoza); Antoni Zabalza (Department of Economic Analysis, University of Valencia)
    Abstract: The purpose of this paper is to evaluate the efficiency cost of transfers. To this end, we develop a model of individual demand decisions about the provision of a regional public good that encompasses a continuum of tax/transfers scenarios to finance regional public expenditure. We assume that individuals have identical quasi-linear preferences defined over private consumption and the regional public good, that endowment income varies between individuals and regions and that regions have different predetermined sizes. We show that, despite its simplicity, this model is capable of discriminating the efficiency properties of the different scenarios considered, and that the substitution of transfers for own regional taxes always raises the provision of the regional public good. Our model yields the so called “flypaper effect” with no need to appeal to the existence of “fiscal illusion” by the part of the individual. We nevertheless find that “fiscal illusion” increases the elasticity of public good provision with respect to transfers, and we suggest two potentially refutable hypotheses to identify the existence of this phenomenon.
    Keywords: Regional finance, taxes, transfers, fiscal illusion, flypaper effect
    Date: 2012–09–19
  9. By: Baltagi, Badi H. (Syracuse University); Baskaya, Yusuf Soner (Central Bank of Turkey); Hulagu, Timur (Central Bank of Turkey)
    Abstract: This paper presents wage curves for formal and informal workers using a rich individual level data for Turkey over the period 2005-2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including Turkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a significant role in the economy. Using the Turkish Household Labor Force Survey observed over 26 NUTS-2 regions, we find that real hourly wages of informal workers in Turkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.
    Keywords: formal/informal employment, wage curve, regional labor markets
    JEL: C26 J30 J60 O17
    Date: 2012–09
  10. By: Juessen, Falko (TU Dortmund); Linnemann, Ludger (TU Dortmund)
    Abstract: We propose using sign restrictions to identify regional labor demand shocks in a panel VAR of US federal states. Observed migration responds significantly, but less persistently than the residual-based migration measure constructed by Blanchard and Katz (1992).
    Keywords: regional labor markets, migration, panel VAR, sign restrictions
    JEL: E24 R11 C33 C32
    Date: 2012–07
  11. By: Boeri, Tito (Bocconi University); De Philippis, Marta (London School of Economics); Patacchini, Eleonora (Sapienza University of Rome); Pellizzari, Michele (OECD)
    Abstract: We use a new dataset and a novel identification strategy to analyze the effects of residential segregation on the employment of migrants in 8 Italian cities. Our data, which are representative of the population of both legal and illegal migrants, allow us to measure segregation at the very local level (the block) and include measures of house prices, commuting costs and migrants' linguistic ability. We find evidence that migrants who reside in areas with a high concentration of non-Italians are less likely to be employed compared to similar migrants who reside in less segregated areas. In our preferred specification, a 10 percentage points increase in residential segregation reduces the probability of being employed by 7 percentage points or about 8% over the average. Additionally, we also show that this effect emerges only above a critical threshold of 15-20% of migrants over the total local population, below which there is no statistically detectable effect. The negative externality associated with residential segregation arises only for the employment prospects of immigrants, whether legal or illegal. We do not find evidence of either spatial mismatch or skill bias as potential explanations of this effect. Statistical discrimination by native employers is the remaining suspect.
    Keywords: migration, residential segregation, hiring networks
    JEL: J15 J61 R23
    Date: 2012–09
  12. By: Pablo Simón-Cosano (Universitat Pompeu Fabra); Santiago Lago-Peñas (REDE, IEB and University of Vigo); Alberto Vaquero (University of Vigo)
    Abstract: This paper studies the effect of political variables on the gains obtained by Spanish regions in periodical bargaining of the intergovernmental financing agreements and on the regional distribution of discretional earmarked grants over the period 1987-2008. First, we find that the relationship between gains in transferred revenues and on regional public debt stocks depends on the period and the specific issues discussed in the corresponding negotiation, aside from political affinity. Second, we show that the most discretional program of earmarked grants is strongly driven by electoral strategy. National incumbents tend to allocate intergovernmental transfers where there are competitive regional elections. Moreover, we show that earmarked grants are allocated in those regions where the incumbent performs better in national elections and, especially, in those where there are more seats to be won. Hence we prove that both strategies are complementary rather than exclusive.
    Keywords: Intergovernmental grants, party systems, elections, subcentral public debt.
    Date: 2012–09–19
  13. By: Franz-Josef Bade (University of Dortmund); Eckhardt Bode (Kiel Institute for the World Economy); Eleonora Cutrini (University of Macerata)
    Abstract: <p align="justify">We explore to what extent key functions in manufacturing are spatially clustered with, or dispersed from,each other within industries, and how these clustering or dispersion patterns have changed during recent decades. Estimating the levels and changes (1992–2007) of localizations and colocalizations of selected functions (production, headquarter services, R&D) within 27 West German industries by means of K densities, we identify two broad groups of industries. In “fragmenting” industries,which account for one half of manufacturing employment, functions were more clustered with each other than the industry as a whole after the fall of the Iron Curtain but have, in accordance with regional theories of spatial fragmentation, been unbundled spatially from each other subsequently. In “integrating” industries, by contrast, which account for one third of manufacturing employment, functions were initially dispersed from each other but have subsequently been rebundled spatially with each other. We hypothesize that this spatial rebundling is a consequence of offshoring, i.e., international fragmentation.</p>
    Keywords: fragmentation,localization,colocalization,functions,offshoring,Germany,K density,manufacturing
    JEL: C19 L60 F23 R12
    Date: 2012–02
  14. By: Rajashri Chakrabarti; Joydeep Roy
    Abstract: Local financing of public schools in the United States leads to a bundling of two distinct choices – residential choice and school choice – and has been argued to increase the degree of socioeconomic segregation across school districts. A school finance reform, aimed at equalization of school finances, can in principle weaken this link between housing choice and choice of schools. In this paper, we study the impacts of the Michigan school finance reform of 1994 (Proposal A) on spatial segregation. The reform was a state initiative intended to equalize per-pupil expenditures between Michigan school districts and reduce the role of local financing. We find that Proposal A was responsible for increases in the value of housing stock in the lowest-spending school districts, and for improvements in several socioeconomic indicators in these districts, implying a decline in neighborhood sorting. We also find that the reform affected dispersion of incomes and educational attainment within school districts, increasing within-district heterogeneity in the lowest-spending school districts, while decreasing the same in the highest-spending districts. However, there is continued high demand for residence in the highest-spending communities, suggesting the importance of neighborhood peer effects ("local" social capital) and implying that even a comprehensive government aid program can fail to make a large impact on residential segregation.
    Keywords: Segregation in education ; Public schools ; Local finance ; School choice ; Social choice
    Date: 2012
  15. By: Debra Mountford; Greg Clark; Peter Dupej; Mateu Hernández; Joe Huxley
    Abstract: This project aims to support the Slovak Republic as it seeks to create a clear rationale for the Regional Development Agencies Integrated Network which currently comprises 38 agencies. The project considers the efficiency of the network and evaluates the appropriateness of the agencies’ functions, competencies and remit for delivery of effective local economic development. The project is part of series of reforms which have been taking place in the Slovak Republic to realise the aims and objectives of The Act No. 539/2008 coll. on regional development (539 Act) on the Support of Regional Development which provides the a general framework for regional development policy and delivery in accordance with the 2004 Ministerial Guidelines on PHSR – Economic and Social Development Programme of Higher Territorial Unit.
    Date: 2012–09–20
  16. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Messmann, Susanne; Trappmann, Mark (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Reservation wages indicate the wage threshold for which individual workers are inclined to supply their working capacity. In important theoretical approaches it is assumed that this threshold depends on the unemployment rate. If this is true, the variation of reservation wages might be an important force behind the regional 'wage curve', which has been estimated in many empirical studies. Up to now, the connection of regional unemployment with reservation wages has not been tested, since research possibilities depend on survey data which were not available. With the 'Labour Market and Social Security' study (PASS), a new large panel survey in Germany, information on regional reservation wages is available. The empirical analysis with this data opens up the 'black box' of the wage generation process and delivers insights about its determining factors. The analysis is based on job matching and efficiency wage theory which are used to derive a relationship between unemployment and reservation wages." (Author's abstract, IAB-Doku) ((en))
    Keywords: Einkommenserwartung, Arbeitslosigkeit, regionale Verteilung, IAB-Haushaltspanel, Lohnkurve, Lohnfindung, regionaler Arbeitsmarkt, Effizienzlohntheorie
    JEL: J64 J31 R23
    Date: 2012–09–20
  17. By: Jonathan Halket; Michael Amior
    Abstract: Are households more likely to be homeowners when �housing risk� is higher? We show that homeownership rates and loan-to-value (LTV) ratios at the city level are strongly negatively correlated with local house price volatility. However, causal inference is confounded by house price levels, which are systematically correlated with housing risk in an intuitive way: in cities where the land value is larger relative to the local cost of structures, house prices are higher and more volatile. We disentangle the contributions of high price levels from high volatilities by building a life-cycle model of homeownership choices. The model is able to explain much of the cross-city dispersion in homeownership and LTV. We find that higher price levels explain the lower homeownership, while higher risk explains the lower LTV in high land value cities. The relationship between LTV and risk highlights the importance of including other means of incomplete insurance in models of homeownership. Finally, we use the model to show why regression-based inferences about the effect of risk on homeownership are biased.
    Date: 2012–07–28
  18. By: Eduardo A. Haddad; Yasuhide Okuyama
    Abstract: The event of the Israeli bombing in Lebanon in the summer of 2006 is a unique example of a recent man-made disaster. The bombing actions were concentrated in time – they lasted roughly one month so that the time frame is still considered short in an economic modeling sense; they were also spatially focused – they reached not only various targeted infrastructure points across the country, but also scattered locations in the south of the country. Economic impacts of disasters caused by natural or man-made hazards are complex and difficult to assess and evaluate, due to the features and uniqueness of disasters; however, some methodologies have been utilized to analyze their impacts. This paper aims to evaluate the short run economic effects of the July 2006 War using an interregional CGE model for Lebanon. We look at the economy of the country just before the War and estimate what would be the hypothetical economy-wide impact had the Lebanese regions faced a reduction of physical capital stocks in the same magnitude of the estimated damages associated with the bombing events. In doing that, we are able to derive the estimates of the economic costs of the war related to the structural break in the availability of economic infrastructure in the country. A discussion on resiliency is also introduced.
    Keywords: D5, R1, Q54, R13
    Date: 2012–09–14
  19. By: Trax, Michaela (University of Duisburg-Essen); Brunow, Stephan (Institute for Employment Research (IAB), Nuremberg); Suedekum, Jens (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, knowledge spillovers
    JEL: R23 J21 J31
    Date: 2012–09
  20. By: Pham, Thi Thanh Hong; Nguyen, Binh Giang
    Abstract: This paper reviews the industrial agglomeration and evaluates the industrial clustering policy in Vietnam. Base on the Kuchiki flowchart on the building of industrial clustering policy for developing countries, the authors suggest a policy framework for Vietnam.
    Keywords: Industrial agglomeration; industrial cluster; industrial upgrading; economic restructure; Vietnam economy
    JEL: R12 R11
    Date: 2012–09–14

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