nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒01‒26
twenty-two papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Regionalization vs. Globalization By HIRATA Hideaki; Ayhan KOSE; Christopher OTROK
  2. Detecting dependence between spatial processes By Herrera Gómez, Marcos; Ruiz Marín, Manuel; Mur Lacambra, Jesús
  3. Spatial autoregressive spillovers vs unobserved common factors models. A panel data analysis of international technology diffusion By Cern Ertur; Antonio Musolesi
  4. Commuting Time and Accessibility in a Joint Residential Location, Workplace, and Job Type Choice Model By Ignacio A. Inoa; Nathalie Picard; André de Palma
  5. Forecasting regional growth in Germany: A panel approach using business survey data By Wenzel, Lars
  6. Business cycle and entrepreneurial behavior using French regional data By Mathilde Aubry; Jean Bonnet; Patricia Renou-Maissant
  7. A two-country model of high skill migration with public education By Naiditch, Claire; Vranceanu, Radu
  8. Birthplace Diversity and Economic Prosperity By Alberto Alesina; Johann Harnoss; Hillel Rapoport
  9. Task Specialization in U.S. Cities from 1880-2000 By Guy Michaels; Ferdinand Rauch; Stephen J. Redding
  10. Why the geographic variation in health care spending can't tell us much about the efficiency or quality of our health care system By Louise Sheiner
  11. Technology Spillover of Foreign Direct Investment: An Analysis of Different Clusters in India By Behera, Smruti Ranjan Behera; Dua , Pami Dua; Goldar, Bishwanath Goldar
  12. Historic Amenities, Income and Sorting of Households By Hans R. A. Koster; Piet Rietveld; Jos Van Ommeren
  13. Foreign Trade and FDI in the Austrian Regions – A new methodology to estimate regional trade and an analysis of the crisis effects By Roman Römisch
  14. Towards a policy to promote tourism clusters By Benner, Maximilian
  15. Rocketing Rents The magnitude and attenuation of agglomeration economies in the commercial property market By Hans R. A. Koster
  16. Economic segregation and urban growth By Li, Jing
  17. Regional Disparities in Growth and Human Development in India By Roy, Satyaki
  18. Accounting for regional poverty differences in Croatia: Exploring the role of disparities in average income and inequality By Rubil, Ivica
  19. The Importance of Time Zone Assignment: Evidence from Residential Electricity Consumption By Felix Weinhardt
  20. History and Urban Primacy: The Effect of the Spanish Reconquista on Muslim Cities By David Cuberes; Rafael González-Val
  21. Lake Amenities, Environmental Degradation, and Great Lakes Regional Growth By Stephens, Heather; Partridge, Mark
  22. Equilibrio regional y patrones de migración para el continente americano 1960 – 2005: Análisis espacial por panel de datos By Hernán Enriquez Sierra; Jacobo Campo Robledo

  1. By: HIRATA Hideaki; Ayhan KOSE; Christopher OTROK
    Abstract: Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960-2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles, especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.
    Date: 2013–01
  2. By: Herrera Gómez, Marcos; Ruiz Marín, Manuel; Mur Lacambra, Jesús
    Abstract: Testing the assumption of independence between variables is a crucial aspect of spatial data analysis. However, the literature is limited and somewhat confusing. To our knowledge, we can mention only the bivariate generalization of Moran’s statistic. This test suffers from several restrictions: it is applicable only to pairs of variables, a weighting matrix and the assumption of linearity are needed; the null hypothesis of the test is not totally clear. Given these limitations, we develop a new non-parametric test based on symbolic dynamics with better properties. We show that the test can be extended to a multivariate framework, it is robust to departures from linearity, it does not need a weighting matrix and can be adapted to different specifications of the null. The test is consistent, computationally simple and with good size and power, as shown by a Monte Carlo experiment. An application to the case of the productivity of the manufacturing sector in the Ebro Valley illustrates our approach.
    Keywords: Non-parametric methods; Spatial bootstrapping; Spatial independence; Symbolic dynamics
    JEL: C12 R12 C15 C21
    Date: 2013
  3. By: Cern Ertur; Antonio Musolesi
    Abstract: This paper provides an econometric examination of geographic R&D spillovers among countries by focusing on the issue of cross-sectional dependence. By applying several unit root tests, we show that when the number of lags of the autoregressive component of augmented Dickey Fuller test-type speci…cations or the number of common factors is estimated in a model selection framework, the variables (total factor productivity and the R&D capital stocks) appear to be stationary. Then, we estimate the model using two complementary approaches, focusing on generalised spatial autoregression and unobserved common correlated factors. These approaches account for different types of cross-sectional dependence and are related to the notions of weak and strong cross-sectional dependence recently developed in the literature.
    Keywords: Panel data, Cross-section correlation, Spatial models, Factor models, Unit root
    JEL: C23 C5 F0 O3
    Date: 2012–12–19
  4. By: Ignacio A. Inoa; Nathalie Picard; André de Palma (THEMA, Universite de Cergy-Pontoise and THEMA; THEMA, Universite de Cergy-Pontoise and THEMA; ENS Cachan)
    Abstract: The effect of an individual-specific measure of accessibility to jobs is analyzed using a three-level nested logit model of residential location, workplace, and job type choice. This measure takes into account the attractiveness of different job types when the workplace choice is anticipated in the residential location decision. The model allows for variation in the preferences for job types across individuals and accounts for individual heterogeneity of preferences at each choice level in the following dimensions: education, age, gender and children. Using data from the Greater Paris Area, estimation results indicate that the individual-specific accessibility measure is an important determinant of the residential location choice and its effect differ along the life cycle. Results also show that the job type attractiveness measure is a more significant predictor of workplace location than the standard measures.
    Keywords: residential location, job location, accessibility, nested logit, Greater Paris.
    JEL: R21 C35 C51
    Date: 2013
  5. By: Wenzel, Lars
    Abstract: This paper is a first attempt to construct quantitative forecasts for regional growth in Germany using business survey data (BSD) from the German chambers of commerce. A panel approach is used to model the growth rates of the Bundesländer from the year 2000 onwards. The proposed model does well in explaining regional growth and the coefficients on the BSD are relatively stable. Results suggest that an indicator that is 10 points higher reflects growth rates that are 0.3-0.4 percentage points higher, while a 10 point increase from the previous year suggests an increase in growth by 0.25 percentage points. Fixed effects are found to play a negligible role. The BSD provides additional information on regional growth and outperforms the benchmark without BSD by up to 14 per cent for the full time period. For the period from 2000 to 2007 this value is as much as 20 per cent. However, for the time period from 2008 onwards, BSD does not provide significant information content over the benchmark. This reflects several shortcomings of the BSD, which nonetheless appears a valuable source of information in forecasting regional growth. --
    Date: 2013
  6. By: Mathilde Aubry (EM Normandie, Métis Research Department, France); Jean Bonnet (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France); Patricia Renou-Maissant (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France)
    Abstract: We study the influences of new firms startups on growth in regional and macroeconomic dimensions in France using a quarterly data basis over the 1993-2011 period. We find that fluctuations in GDP are an early indicator of new firm startups. Nevertheless the most important relationships are found between unemployment rate and new firms startups. Entrepreneurship is mainly driven by necessity motives that have consequences upon potential of growth of new firms startups in most of the French regions.
    Keywords: New firm formation, Business cycle, Schumpeter effect, «refugee» effect, panel data
    JEL: L26 E32 R11
    Date: 2013–01
  7. By: Naiditch, Claire (ESSEC Business School); Vranceanu, Radu (ESSEC Business School)
    Abstract: This paper proposes a two-country model of migration in a transferable skill sector, where workers'education is provided free of charge by governments. We study firstly the non-cooperative equilibrium where the poor country decides on the education level and the rich country decides on the quota of skilled migrants. Additional migration raises earnings prospects in the source country and attracts more talented people to that profession, what we refer to as the sector-specific brain gain effect. This game presents a single stable equilibrium with positive migration. Compared to the cooperative equilibrium, in the noncooperative equilibrium the poor country systematically under-invests in education. Whether migration is too strong or too weak depends on the size of the brain gain effect. Furthermore, the size of the welfare gain to be reaped by moving from non-cooperative to the cooperative organization of migration also depends on the strength of the sector-specific brain gain.
    Keywords: High-skill migration; Brain-gain; Public education; Human capital; Government
    JEL: F22 H11 I25
    Date: 2013–01
  8. By: Alberto Alesina (Harvard University and IGIER Bocconi); Johann Harnoss (EQUIPPE, University of Lille, Harvard University and HWWI Hamburg); Hillel Rapoport (Bar-Ilan University, EQUIPPE and Center for International Development, Harvard University)
    Abstract: The diversity of people has economic costs and benefits. Using recent immigration data from 195 countries, we propose an index of diversity based on people's birthplaces. This new index is decomposed into a "size" (share of foreign born) and a "variety" (diversity of immigrants) component and is available for 1990 and 2000 and for the overall as well as for the high (workers with college education) and low-skill fractions of the workforce. We show that birthplace diversity is largely uncorrelated with ethnic and linguistic fractionalization and that - unlike fractionalization - it is positively related to economic development even after controlling for education, institutions, ethnic and linguistic fractionalization, trade openness, geography, market size, and origin-effects. This positive association appears particularly strong for the diversity of skilled immigrants in richer countries. We make progress towards addressing endogeneity by specifying a gravity model to predict the diversity of immigration based on exogenous bilateral variables. The results are robust across various OLS and 2SLS specifications.
    Keywords: Birthplace diversity, ethnic diversity, economic growth, productivity, immigration.
    JEL: O1 O4 F22 F43
    Date: 2013–01
  9. By: Guy Michaels; Ferdinand Rauch; Stephen J. Redding
    Abstract: We develop a new methodology for quantifying the tasks undertaken within occupations using 3,000 verbs from around 12,000 occupational descriptions in the Dictionary of Occupational Titles (DOTs). Using micro-data from the United States from 1880-2000, we find an increase in the employment share of interactive occupations within sectors over time that is larger in metro areas than non-metro areas. We provide evidence that this increase in the interactiveness of employment is related to the dissemination of improvements in transport and communication technologies. Our findings highlight a change in the nature of agglomeration over time towards an increased emphasis on human interaction.
    JEL: N92 O18 R12
    Date: 2013–01
  10. By: Louise Sheiner
    Abstract: This paper examines the geographic variation in Medicare and non-Medicare health spending and finds little support for the view that most of the variation is attributable to differences in practice styles. Instead, I find that socioeconomic factors that affect the need for medical care, as well as interactions between the Medicare system, Medicaid, and private health spending, can account for most of the variation in Medicare spending. Furthermore, I find that the health spending of the non-Medicare population is not well correlated with Medicare spending, suggesting that Medicare spending is not a good proxy for average health spending by state. Finally, there is a negative correlation between the level and growth of Medicare spending: Low-spending states are not low-growth states and are thus unlikely to provide the key to curbing excess cost growth in Medicare. ; The paper also explores the econometric differences between controlling for health attributes at the state level vs the individual level. I show that a state-level approach is better at controlling for health attributes and argue that this econometric difference likely explains most of the difference between my results and those of the Dartmouth group. ; More broadly, the paper shows that the geographic variation in health spending does not provide a useful measure of the inefficiencies of our health system. States where Medicare spending is high are very different in multiple dimensions from states where Medicare spending is low, and thus it is difficult to isolate the effects of differences in health spending intensity from the effects of the differences in the underlying state characteristics. I show, for example, that the relationships between health spending, physician composition and quality are likely the result of omitted factors rather than the result of causal relationships.
    Date: 2013
  11. By: Behera, Smruti Ranjan Behera; Dua , Pami Dua; Goldar, Bishwanath Goldar
    Abstract: This paper explores the technology spillover effect of foreign direct investment (FDI) in Indian manufacturing industries across different clusters in India. To measure the spillover effect to domestic firms in a particular cluster, a model is used that combines an innovative production function with a conventional one. The empirical findings reveal significant variations across clusters with regard to spillovers. While some clusters benefit from cluster-specific foreign presence and technology stock, a more commonly observed pattern is that domestic firms in a cluster gain from the presence of foreign firms in other clusters of the region and region-specific technology stock.
    Keywords: Foreign Direct Investment; Technology Spillover; Clusters; Firm location
    JEL: C23 C83 L60
    Date: 2012–10–01
  12. By: Hans R. A. Koster; Piet Rietveld; Jos Van Ommeren
    Abstract: We test the impact of historic amenities on house prices and sorting of households within cities. Conservation area boundaries enable us to employ a semiparametric regression-discontinuity approach to measure the impact of historic amenities. The approach allows for household-specific preferences. Conditional on neighbour attributes, the price difference at the conservation boundary is about 3 percent. Internal historic amenities are also important, as listed houses are about 6 percent more expensive. It is shown that rich households sort themselves in conservation areas and in listed buildings, because they have a higher willingness to pay for historic amenities. The results contribute to an explanation for the substantial spatial income differences within cities.
    Keywords: historic amenities, sorting, conservation areas, semiparametric regression-discontinuity design, hedonic price method
    JEL: R14 R21 R31 R38
    Date: 2013–01
  13. By: Roman Römisch
    Abstract: Foreign trade and foreign direct investments (FDI) are key elements for economic development and growth of both a country and its regions. This paper focuses on foreign trade and FDI in Austrian regions (Bundesländer). Unfortunately, data on regional trade in Austria is only available on a very limited basis. The aim of this study is to develop new methodologies for the estimation of exports and imports of Austrian regions and analyse the data generated by this methodology. The basic idea is to disaggregate national foreign trade data to the regional level by using national input-output, regional employment and other supplemental data. This allows estimating Austrian regional foreign trade for the years 1999 to 2009. The study shows a large variation in trade among regions. Lower Austria, Upper Austria, Styria and Vorarlberg are the regions with the highest export share. The importance of regional trade increases between 1999 and 2008; the crisis in 2009 had a strong negative impact. Furthermore, the competitiveness of regions differs considerably. Only three regions, Upper Austria, Styria and Vorarlberg, show trade surplus.
    Keywords: Austria, regions, Bundesländer, foreign trade, economic crisis
    JEL: C82 F10 F14 F16 R1 R12 R15
    Date: 2012–10
  14. By: Benner, Maximilian
    Abstract: When thinking about clusters, primarily agglomerations of manufacturing and related service industries come into mind. Yet, clustering in tourism is as salient as in few other industries. Tourism clusters are an empirical fact. Considering the high relevance of tourism to many regions and nations, linking cluster and tourism policy seems worth considering. For this, a special theory of tourism cluster policy is needed, as tourism offers some particular characteristics that set it apart from other industries. On the basis of an analysis of these specifics, this article develops a toolbox for cluster policy specifically aimed at agglomerations in the tourism industry. It offers an overview of ways to use tourism agglomerations for the economic development of nations and regions, including rural ones.
    Keywords: clusters; cluster policy; tourism economic growth; regional policy; rural development
    JEL: O18 L83 R11
    Date: 2013
  15. By: Hans R. A. Koster
    Abstract: Rocketing rents in urban areas are likely explained by agglomeration economies. This paper measures the impact of these external economies on commercial property values using unique micro]data on commercial rents and employment. A measure of agglomeration is employed that is continuous over space, avoiding the modifiable areal unit problem. To distinguish agglomeration economies from unobserved endowments and shocks, I use temporal variation in densities and instrumental variables. The spatial extent of agglomeration economies is determined by estimating a spatial bandwidth within the model. The results show that agglomeration economies have a considerable impact on rents: a standard deviation increase in employment density leads to an increase in rents of about 10 percent. The geographical extent of these benefits is about 15 kilometres. The bias of ignoring time]invariant unobserved endowments and unobserved shocks seems to be limited.
    Keywords: commercial buildings, hedonic pricing, agglomeration economies, spatial decay, kernel densities
    JEL: R30 R33
    Date: 2013–01
  16. By: Li, Jing
    Abstract: Many studies have investigated the socioeconomic consequences of residential economic segregation in U.S. urban areas. These studies mainly focus on the impact of economic segregation on the poor or minorities and almost universally find that economic segregation hurts these groups in many ways. However, few studies investigate how economic segregation relates to the economic growth of an urban area as a whole. While there are papers that study this issue theoretically, empirical evidence is lacking. The motivation of this paper is to fill this gap. Using U.S. census data, this study documents a significant negative relationship between the initial levels of economic segregation in 1980 and the subsequent economic growth, indexed by metropolitan population growth, in 1980-2000 in U.S. metropolitan statistical areas (MSAs). Holding other things constant, MSAs having higher initial levels of economic segregation experienced substantially slower subsequent population growth.
    Keywords: economic segregation; human capital externalities; social interactions; urban growth
    JEL: D62 O40 R11
    Date: 2012–12–20
  17. By: Roy, Satyaki
    Abstract: This paper argues that per capita income in all states in India increased in the past four decades but in fact no sign of convergence could be visible as it was expected in the context of liberalizing markets. The paper shows that disparities in terms of income were higher within the rural areas across states compared to their urban counterparts. This might be a reflection of a converging trend in terms of opportunities available in the cities and towns across states. The paper identifies a declining gap in terms of various human development indices such as literacy rate, general enrollment ratio and life expectancy at birth across states and shows that gaps also declined between the rural and urban segments within states. The paper however argues that performance in terms of various dimensions of human development increases with income but at a declining rate which is indicative of the fact that per capita income at higher levels becomes less important in generating gains in terms of basic human development indices. Finally, the paper compares the performance of the states in terms of human development over the years including that computed from the latest available data and shows that the relative positions of the states did not undergo much change over the years.
    Keywords: growth; per capita income; human development
    JEL: I21 I10 I32
    Date: 2012–09
  18. By: Rubil, Ivica
    Abstract: The prevalence of poverty in a given population is determined by both the level of average income and the shape of income distribution. Accordingly, the difference in poverty between two populations can be attributed to disparities in their average incomes and in the levels of income inequality. In this paper, we decompose the differences in relative poverty between each of the twenty-one Croatian counties and Croatia as a whole into the contributions of the mean income and income inequality, using the Household Budget Survey data for 2010. The decomposition framework that we utilize here is one usually applied for decompositions of intertemporal poverty changes, and is based on the concept of Shapley value from cooperative game theory. Poverty is measured by three conventional measures – the headcount ratio, the poverty gap, and the squared poverty gap – and robustness of the results to switching from one measure to another is discussed. The results of decompositions show that in most cases both the mean income and inequality differences contribute to poverty variation across the counties, relative to poverty in Croatia as a whole. When poverty is measured by the headcount ratio, the income contribution dominates the inequality contribution, while when we switch to the other two measures, which give more weight to poorer among the poor, the inequality contribution starts to dominate.
    Keywords: regional poverty; decomposition; income contribution; inequality contribution; Shapley value; Croatia
    JEL: D63 I32
    Date: 2013–01–16
  19. By: Felix Weinhardt
    Abstract: This paper presents the first nationwide empirical assessment of residential electricity use in response to the timing of daylight. Employing Geographical Information Systems (GIS) solar times of sunrise and sunset are calculated for all geographical locations in mainland USA. This is used to uncover the non-standard variation in sunrise times in standard local time over space, depending on time zone, daylight saving time, and geographical position within time zone. This variation is subsequently used to uncover county-level responses in residential electricity consumption to changes in sunlight. I find no robust overall effect of sunrise times, but early sunrise is associated with lower residential electricity use in the North, but higher consumption in the South. These results would suggest that additionally splitting the USA into time-zones horizontally could reduce the total annual residential electricity bill, but further research is needed to examine the behavioral channels that could give rise to these effects.
    Keywords: time-use, time zones, daylight saving, energy consumption, GIS
    JEL: H4 Q4
    Date: 2013–01
  20. By: David Cuberes (Department of Economics, The University of Sheffield); Rafael González-Val (Department of Economics, The University of Sheffield)
    Abstract: This paper aims to study the effect of a major historical event on the Spanish city size distribution, the Spanish Reconquista. This was a long military campaign that aimed to expel Muslims from the Iberian Peninsula. The process started in the early 1300s and ended around 1500, when the entire peninsula was brought back under Christian rule. The Reconquista had a major effect on the evolution of the Muslim and Christian populations during this period and offers a unique “quasi-natural” experiment. The Reconquista dramatically decreased the population of the three main cities of the Moorish Caliphate - Granada, Cordoba, and Seville. This represents a very particular shock in the sense that these were cities with a vast majority of Muslim population, which was then replaced by Christian residents. Using a methodology closely related to Nitsch (2003) we show that the effect of the Reconquista on both the relative size of these three cities was indeed dramatic and that it cannot be simply explained by similar trends in other important national or international cities. Granada lost 53% of its population during the 1300-1800 period, whereas the figures for Cordoba and Seville were 33% and 7%, respectively. These impressive population drops are still present even after controlling for a large set of country and city-specific socioeconomic indicators. We interpret these results as suggestive that the Spanish Reconquista shock had permanent effects, and therefore, in the context studied here, history does not matter for city growth. Our results suggest that the locational fundamentals that made these three cities the most populated ones in the Peninsula for about 500 years ceased to be crucial growth determinants once Christians took control of them.
    Keywords: urban primacy; locational fundamentals; city growth; lock-in effects
    JEL: R12 N9
    Date: 2013
  21. By: Stephens, Heather; Partridge, Mark
    Abstract: Regional migration and growth are increasingly associated with high-quality in situ natural amenities. However, most of the previous U.S. research has focused on the natural amenities of the Mountain West or the South. The Great Lakes, with their abundant fresh water and natural amenities, would also appear well-positioned to provide the foundation for this type of economic growth. Yet, while some parts of the western Great Lakes region are prime examples of amenity-led growth, other areas in the eastern Great Lakes may not have capitalized on their natural amenities, perhaps because of their strong industrial legacy. Using a unique county-level dataset for the Great Lakes region (including Indiana, Illinois, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wisconsin), we test whether growth in the region is associated with proximity to lake amenities and whether there are offsetting industrial legacy or pollution effects. We also examine whether amenities have additional attraction value for those with high levels of human capital. Consistent with theory that suggests that natural amenities are normal or superior goods, we find that coastal areas in the region are positively associated with increases in shares of college graduates. However, we find little evidence that lake amenities contribute to broader household migration, especially after 2000. Based on these results, there may be opportunities to leverage Great Lake amenities to support economic growth in terms of attracting individuals with high levels of human capital who are most likely to make quality of life migration decisions.
    Keywords: Regional growth; natural amenities
    JEL: O18
    Date: 2012–12–28
  22. By: Hernán Enriquez Sierra; Jacobo Campo Robledo
    Abstract: El artículo analiza la dinámica de la migración en el continente americano desde 1960 a 2005 empleando un enfoque de desequilibrio como el propuesto por Sjaastad (1969) y Todaro (1969). Mediante técnicas recientes de econometría espacial se evalúan los flujos migratorios, controlando por el efecto de movilidad del trabajo y el ajuste salarial a escala regional determinados por los salarios reales y por la población de cada país. Adicionalmente, el modelo estimado busca variaciones en la migración teniendo en cuenta características de la población en cada uno de los países, específicamente la proporción de personas en edad de trabajar, desempleo y salario relativo. Estimando la migración neta se tiene que el equilibrio espacial migratorio se ve afectado negativamente por los salarios y positivamente por la oferta de trabajo existente.
    Date: 2012–12–30

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