nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒10‒06
six papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Innovation and spatial inequality in Europe and USA By Lee, Neil; Rodríguez-Pose, Andrés
  2. Large Agglomerations and Economic Growth in Urban India: An Application of Panel Data Model By Tripathi, Sabyasachi
  3. Heterogeneity of Regional Growth in the European Union By Martin Wagner; Achim Zeileis
  4. Real Convergence in Europe: A Cluster Analysis By Juan Carlos Cuestas; Mercedes Monfort; Javier Ordóñez
  5. Structural Breaks and Relative Price Convergence among U.S. Cities By Hiranya K. Nath; Natalie Hegwood
  6. Big ideas: valuing schooling through house prices By Steve Gibbons

  1. By: Lee, Neil; Rodríguez-Pose, Andrés
    Abstract: Innovation is a crucial driver of urban and regional economic success. Innovative cities and regions tend to grow faster and have higher average wages. Little research, however, has considered the potential negative consequences: as a small body of innovators gain relative to others, innovation may lead to inequality. The evidence on this point is fragmented, based on cross-sectional evidence on skill premia rather than overall levels of inequality. This paper provides the first comparative evidence on the link between innovation and inequality in a continental perspective. Using micro data from population surveys for European regions and US Cities, the paper finds, after controlling for other potential factors, good evidence of a link between innovation and inequality in European regions, but only limited evidence of such a relationship in the United States. Less flexible labour markets and lower levels of migration seem to be at the root of the stronger association between innovation and income inequality in Europe than in the US.
    Keywords: Cities; European Union; Inequality; Innovation; Regions; United States
    JEL: D31 O31 R13
    Date: 2012–09
  2. By: Tripathi, Sabyasachi
    Abstract: This paper investigates the impact of urban agglomeration on urban economic growth, using static and dynamic panel data approach, based on data of 52 large cities in India for the period 2000 to 2009. The results shows that agglomeration has a strong positive effect on urban economic growth and support the “Williamson hypothesis” that agglomeration increases economic growth only up to certain level of economic development. The critical level per-capita city income is estimated about Rs. 37049 per-capita at 1999-2000 constant prices. In addition, the results indicate that human capital accumulation promotes urban economic growth.
    Keywords: Agglomeration; Economic Growth; Panel Data Approach; Urban India
    JEL: P25
    Date: 2012–08
  3. By: Martin Wagner; Achim Zeileis
    Abstract: This paper uses model-based recursive partitioning to study economic growth in the 255 European Union NUTS2 regions over the period 1995-2005. The starting point of the analysis is a human-capital augmented Solow-type growth equation similar in spirit to Mankiw, Romer, and Weil (1992). Initial GDP and the share of highly educated in the working age population are found to be important for explaining economic growth, whereas the investment share in physical capital is only significant for coastal regions in the PIIGS countries. Recursive partitioning leads to a regression tree with four terminal nodes with partitioning according to (i) capital regions, (ii) non-capital regions in or outside the so-called PIIGS countries and (iii) inside the respective PIIGS regions furthermore between coastal and non-coastal regions.
    Keywords: convergence, growth regressions, recursive partitioning, regional data
    JEL: C31 C51 O18 O47
    Date: 2012–10
  4. By: Juan Carlos Cuestas (Department of Economics, The University of Sheffield); Mercedes Monfort (Jaume I University, Spain); Javier Ordóñez (University of Bath)
    Abstract: In this paper we analyse real convergence in GDP per worker in the EU member states. The aim is to test whether there is evidence of club convergence in the EU, i.e. divergence in GDP per worker. Evidence in favour of cluster or club convergence may be an indication of significant productivity divergences between countries, which may also explain the current turmoil in the euro zone. The results show evidence of different economic growth rates within Europe, which also converge to different steady states, implying divergence in the EU-14. Within the EU-14 member states we observe two convergence clubs, which are not related to the fact that some countries belong to the euro area. Furthermore, Eastern European countries are also divided in two clubs, with a more direct effect of belonging to the euro zone in the composition of the clubs.
    Keywords: cluster; real convergence; economic integration; euro
    JEL: C32 C33 O47
    Date: 2012
  5. By: Hiranya K. Nath (Department of Economics and International Business, Sam Houston State University); Natalie Hegwood (Department of Economics and International Business, Sam Houston State University)
    Abstract: This paper examines price index convergence among U. S. cities by applying panel unit root test procedures that allow for structural breaks to annual CPI data between 1918 and 2010 for 17 major cities. With an endogenously determined single break in 1985, and two breaks in 1943 and 1990 respectively, the test results provide overwhelming evidence of convergence of relative prices across cities, which is consistent with the existing literature. Most importantly, this study finds that the speed of convergence with structural break(s) is much faster than that reported by previous panel studies with no structural break. Furthermore, correcting for small-sample bias (the so-called “Nickell Bias”) and time aggregation bias generates a half-life of 2.8 years with two breaks, which is 74% shorter than the half-life estimate with no structural break and no bias correction. These results highlight the importance of structural break(s) and bias correction in obtaining reasonable panel estimates of the half-life to relative price convergence among U. S. cities.
    Date: 2012–08
  6. By: Steve Gibbons
    Abstract: Steve Gibbons describes the development of CEP research showing how much house prices are boosted by the quality of local schools
    Keywords: education, house prices
    Date: 2012–09

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