nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒02‒08
nineteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Does a hospital’s quality depend on the quality of other hospitals? A spatial econometrics approach to investigating hospital quality competition By Hugh Gravelle; Rita Santos; Luigi Siciliani
  2. Do Labor Market Networks Have An Important Spatial Dimension? By Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
  3. The Regional Dimension of the Unemployment Crisis By Morgenroth Edgar
  4. LEARNING BY WORKING IN BIG CITIES By Jorge De la Roca; Diego Puga
  5. Explaining regional unemployment differences in Germany: a spatial panel data analysis By Franziska Lottmann
  6. Place Based Policies with Unemployment By Patrick Kline; Enrico Moretti
  7. A spatial competitive analysis: the carbon leakage effect on the cement industry under the European Emissions Trading Scheme By Elisabetta Allevi; Giorgia Oggioni; Rossana Riccardi; Marco Rocco
  8. The Role of Expectations: An Application to Internal Migration By Robert Baumann; Justin Svec; Francis Sanzari
  9. The Value of Climate Amenities: Evidence from US Migration Decisions By Paramita Sinha; Maureen L. Cropper
  10. Climatic Fluctuations and the Diffusion of Agriculture By Quamrul Ashraf; Stelios Michalopoulos
  11. Firm size and judicial efficiency: evidence from the neighbour's court By Silvia Giacomelli; Carlo Menon
  12. Regional Variations in Productivity Premium of Exporters: Evidence from plant-level data By OKUBO Toshihiro; TOMIURA Eiichi
  13. The World innovation landscape: Asia rising? By Reinhilde Veugelers
  14. Do Prices and Attributes Explain International Differences in Food Purchases? By Pierre Dubois; Rachel Griffith; Aviv Nevo
  15. Differences in citation impact across countries By Pedro Albarrán; Antonio Perianes-Rodríguez; Javier Ruiz-Castillo
  16. Renewable energy consumption and economic efficiency: Evidence from European countries By Halkos, George; Tzeremes, Nickolaos
  17. Plans de déplacements urbains et capitalisation immobilière : le cas des appartements de l'agglomération nantaise. By Dorothée Brécard; Bernard Fritsch; Rémy Le Boennec
  18. Free Trade Aggreements and the Consolidation of Democracy By Xuepeng Liu; Emanuel Ornelas
  19. Polycentric structure and the co-agglomeration of economic activities in Bogota: A nonparametric perspective. By Antonio Avendaño; Hernán Enríquez

  1. By: Hugh Gravelle (Centre for Health Economics, University of York, UK); Rita Santos (Centre for Health Economics, University of York, UK); Luigi Siciliani (Centre for Health Economics and Department of Economics & Related Studies, University of York, UK)
    Abstract: We examine whether a hospital’s quality is affected by the quality provided by other hospitals in the same market. We first set out a theoretical model with regulated prices which specifies conditions on demand and cost functions which determine whether a hospital will have higher quality when its rivals have higher quality. We then apply spatial econometric methods to a sample of English hospitals in 2009-10 and a set of 16 quality measures including mortality rates, readmission, revision and redo rates and three patient reported indicators to examine to examine the relationship between the quality of hospitals. We find that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. In those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%.
    Keywords: Quality; regulated prices; hospitals; competition; spatial econometrics
    JEL: I1 L3
    Date: 2013–01
  2. By: Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
    Abstract: We test for evidence of spatial, residence-based labor market networks. Turnover is lower for workers more connected to their neighbors generally and more connected to neighbors of the same race or ethnic group. Both results are consistent with networks producing better job matches, while the latter could also reflect preferences for working with neighbors of the same race or ethnicity. For earnings, we find a robust positive effect of the overall residence-based network measure, whereas we usually find a negative effect of the same-group measure, suggesting that the overall network measure reflects productivity-enhancing positive network effects, while the same-group measure may capture a non-wage amenity.
    JEL: J15 R23
    Date: 2013–02
  3. By: Morgenroth Edgar
    Keywords: unemployment/qec
    Date: 2013–01
  4. By: Jorge De la Roca (New York University); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: Individual earnings are higher in bigger cities. We consider three reasons: spatial sorting of initially more productive workers, static advantages from workers’ current location, and learning by working in bigger cities. Using rich administrative data for Spain, we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects. Instead, they obtain an immediate static premium and accumulate more valuable experience. The additional value of experience in bigger cities persists after leaving and is stronger for those with higher initial ability. This explains both the higher mean and greater dispersion of earnings in bigger cities.
    Keywords: Learning, city size, earnings premium, agglomeration economies.
    JEL: R10 R23 J31
    Date: 2013–01
  5. By: Franziska Lottmann
    Abstract: This paper analyzes determinants for regional differences in German unemployment rates. We specify a spatial panel model to avoid biased and inefficient estimates due to spatial dependence. Additionally, we control for temporal dynamics in the data. Our study covers the whole of Germany as well as East andWest Germany separately. We exploit district-level data on 24 possible explanatory variables for the period from 1999 until 2007. Our results suggest that the spatial dynamic panel model is the best model for this analysis. Furthermore, we find that German regional unemployment is of disequilibrium nature, which justifies political interventions.
    Keywords: regional unemployment, spatial dependence, spatial panel models, Germany
    JEL: C23 R12 R23
    Date: 2012–03
  6. By: Patrick Kline; Enrico Moretti
    Abstract: Many countries have policies aimed at creating jobs in depressed areas with high unemployment rates. In standard spatial equilibrium models with perfectly competitive labor and land markets, local job creation efforts are distortionary. We develop a stylized model of frictional local labor markets with the goal of studying the efficiency of unemployment differences across areas and the potential for place based policies to correct local market failures. Our model builds on the heavily studied Diamond - Mortensen - Pissarides framework, adapted to a local labor market setting with a competitive housing market. The result is a simple search analogue of the classic Roback (1982) model that provides a tractable environment for studying the effects of local job creation efforts. In the model, workers are perfectly mobile and the productivity of worker-firm matches may vary across metropolitan areas. In equilibrium, higher local productivity results in higher nominal wages, higher housing costs, and lower unemployment rates. Although workers can move freely to arbitrage away differences in expected utility across metropolitan areas, equilibrium unemployment rates are not equalized across space. We find that if hiring costs are excessive, firms may post too few vacancies. This problem may be offset via local hiring subsidies of the sort found in many place based policies. The optimal hiring subsidy is city specific in the sense that it depends upon the local productivity level.
    JEL: J48 J6 J61 J64
    Date: 2013–02
  7. By: Elisabetta Allevi (University of Brescia); Giorgia Oggioni (University of Brescia); Rossana Riccardi (University of Brescia); Marco Rocco (Bank of Italy)
    Abstract: The European Emissions Trading Scheme (ETS) is a cap and trade system to curb CO2 emissions. It has caused both direct costs (CO2 allowances) and indirect costs (higher electricity prices) to energy-intensive industries. Moreover, as there is no global CO2 agreement, the ETS could distort the European economy, prompting energy-intensive industries to relocate production to unregulated countries: the “carbon leakage” effect. This paper investigates the impact of ETS on the cement industry, focusing on Italy, the second European producer, analyzing a Cournot oligopolistic partial equilibrium model with a detailed technological representation of the market. Simulation results show that the European and Italian cement markets are subject to carbon leakage, especially where carbon regulation is more stringent and where plants are located near the seacoast. Further, transportation costs - particularly high in the cement sector - significantly affect the rate of carbon leakage.
    Keywords: carbon leakage, cement sector, ETS, generalized Nash game
    JEL: C60 D43 D58 C61 Q50
    Date: 2013–01
  8. By: Robert Baumann (Department of Economics, College of the Holy Cross); Justin Svec (Department of Economics, College of the Holy Cross); Francis Sanzari
    Abstract: This paper examines the impact of unemployment on migration. In a theoretical model, we show that unemployment, per se, does not affect migration. Rather, migration only occurs when unemployment shocks force residents to update their expectations of the area's unemployment rate. Once these expectations change, migration reallocates labor to bring the economy back to equilibrium. To test this theory, we devise an empirical strategy using state level data in the U.S. from 2000 to 2010, we find strong empirical evidence that unemployment shocks outside of expectations have a far greater impact on migration than unemployment shocks that are within expectations.
    Keywords: Migration, unemployment, expectations
    JEL: R23 J61 D8
    Date: 2012–12
  9. By: Paramita Sinha; Maureen L. Cropper
    Abstract: We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
    JEL: Q5 Q51
    Date: 2013–02
  10. By: Quamrul Ashraf; Stelios Michalopoulos
    Abstract: This research examines variations in the diffusion of agriculture across countries and archaeological sites. The theory suggests that a societys history of climatic shocks shaped the timing of its adoption of farming. Specifically, as long as climatic disturbances did not lead to a collapse of the underlying resource base, the rate at which foragers were climatically propelled to experiment with their habitats determined the accumulation of tacit knowledge complementary to farming. Thus, differences in climatic volatility across hunter-gatherer societies gave rise to the observed spatial variation in the timing of the adoption of agriculture. Consistent with the proposed hypothesis, the empirical investigation demonstrates that, conditional on biogeographic endowments, climatic volatility has a non-monotonic effect on the timing of the adoption of agriculture. Farming diffused earlier across regions characterized by intermediate levels of climatic fluctuations, with those subjected to either too high or too low intertemporal variability transiting later.
    JEL: O11 O13 O31 O33 O44 Q54 Q55 Q56
    Date: 2013–02
  11. By: Silvia Giacomelli (Bank of Italy); Carlo Menon (OECD and Bank of Italy)
    Abstract: We investigate the causal relationship between judicial efficiency and firm size across Italian municipalities exploiting spatial discontinuities in court jurisdictions for identification. The estimated coefficients suggest that the reduction of the length of civil proceedings could exert, all other things being equal, a significant and positive effect on the average size of Italian firms. Results are robust to a number of different specifications, based on two different databases.
    Keywords: judicial efficiency, firm size, spatial discontinuity, Italy
    JEL: K4 L11 O18
    Date: 2013–01
  12. By: OKUBO Toshihiro; TOMIURA Eiichi
    Abstract: Exporters are more productive than non-exporters. Although this is a stylized fact, little is known on regional variations within a country. Based on plant-level longitudinal data covering all manufacturing industries in all regions of Japan, this paper finds that the productivity premium of exporters tends to be significantly smaller in regions proximate to the core and in regions with higher market potential. We have also confirmed that our principal findings are consistent with plant-level entry/exit dynamics. The export decision is not completely determined by the firm's own productivity; it is also affected by local market size and export costs.
    Date: 2013–01
  13. By: Reinhilde Veugelers
    Abstract: Highlights â?¢ Research and development spending has risen rapidly in Asia, particularly in China, which is now the worldâ??s second R&D spender behind the United States.The increase in Korean and Chinese patent applications has been even more rapid, but Chinese patenting for exploitation on the main markets for innovation(the European Union, Japan and the US) is still marginal. â?¢ Asia's increased innovation spending is most prominently related to information and communication technologies. Overall, the Chinese and Korean economies are still not specialised in knowledge-intensive goods and services.Furthermore, China in particular is not (so far) capturing much value from its role as a manufacturer and exporter of high-tech goods; China remains mostly an assembler of goods, the value of which is created elsewhere. â?¢ It would be wrong to ignore China's innovation potential on the basis of its current performance. Its clear innovation ambitions are likely to drive its future growth. â?¢ Europe is struggling much more than the US to retain its place at the global innovation table. The EU should use Asiaâ??s capacity building in innovation as an opportunity for value capture. Reinhilde Veugelers ( is a Senior Fellow at Bruegel. Research assistance from Francesca Barbiero is gratefully acknowledged.
    Date: 2013–02
  14. By: Pierre Dubois; Rachel Griffith; Aviv Nevo
    Abstract: Food purchases differ substantially across countries. We use detailed household level data from the US, France and the UK to (i) document these differences; (ii) estimate a demand system for food and nutrients, and (iii) simulate counterfactual choices if households faced prices and nutritional characteristics from other countries. We find that differences in prices and characteristics are important and can explain some difference (e.g., US-France difference in caloric intake), but generally cannot explain many of the compositional patterns by themselves. Instead, it seems an interaction between the economic environment and differences in preferences is needed to explain cross country differences.
    JEL: D12 I18 L10
    Date: 2013–02
  15. By: Pedro Albarrán; Antonio Perianes-Rodríguez; Javier Ruiz-Castillo
    Abstract: Recent results indicate that, in spite of the skewness of citation distributions, the ranking of research units that focus on the upper tail of citation distributions is quite similar to the ranking one obtains with average-based indicators. This paper explores the conjecture that this can be explained because country differences in international comparisons have a strong scale factor component. If this is the case, it is argued that the effect on overall citation inequality of differences in citation impact across countries should be drastically reduced when raw citation counts are normalized with the countries’ mean citations. This is what we find for a large Thomson Reuters dataset of articles in Physics and the all-sciences case published in 1998-2003 with a five year citation window, and a partition of the world into 36 countries and two residual geographical areas. We conclude that international comparisons in terms of countries’ mean citations appear to capture most of the differences over the entire support of country citation distributions
    Keywords: Citation impact, Country rankings, Country normalization
    Date: 2012–12
  16. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper examines the relationship between renewable energy consumption and economic efficiency. For this reason conditional Data Envelopment Analysis (DEA) estimators alongside with nonparametric regressions are applied in a sample of 25 European countries for the year 2010. Our results reveal that renewable energy consumption has a positive effect on countries’ economic efficiency for lower consumption levels while for higher levels the analysis reveals mixed effects, which are also subject to regional disparities. Finally, it appears that the effect of renewable energy consumption on countries’ economic efficiency depends also on countries’ specific regional characteristics as well as on the environmental policies adopted.
    Keywords: Renewable energy consumption; economic efficiency; data envelopment analysis; nonparametric regression
    JEL: C14 Q40 Q01 Q20 C60 O44
    Date: 2013–02–02
  17. By: Dorothée Brécard (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Bernard Fritsch (ESO - Espaces Géographiques et Sociétés - CNRS : UMR6590 - Université de Caen Basse-Normandie - Université d'Angers - Université du Maine - Université de Nantes - Université de Rennes II - Haute Bretagne); Rémy Le Boennec (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272)
    Abstract: En France, les Plans de Déplacements Urbains (PDU) visent à favoriser la mobilité pour tous et à trouver un équilibre entre la voiture, les transports collectifs et les autres modes de transport, avec la volonté de promouvoir une mobilité durable. Quelle satisfaction les habitants des pôles urbains tirent-ils de telles politiques ? Dans cet article, nous essayons de répondre à cette question pour les habitants de Nantes Métropole, à travers une analyse de la capitalisation immobilière de divers effets des politiques de transport urbain. En utilisant la méthode des prix hédoniques, nous montrons que les prix immobiliers ne sont pas déterminés uniquement par les caractéristiques intrinsèques des appartements et de leur environnement socio-économique, mais aussi par une meilleure accessibilité. Selon la localisation de l'appartement et le transport collectif utilisé, une meilleure accessibilité au centre apporte des effets contrastés. La pollution de l'air est perçue comme une source de nuisance par les ménages, mais seulement au-delà d'un certain seuil. L'exposition au bruit constitue également une source de désutilité.
    Keywords: capitalisation immobilière ; accessibilité ; pollution de l'air ; exposition au bruit ; méthode des prix hédoniques ; plan de déplacements urbains ; Nantes
    Date: 2013–01–28
  18. By: Xuepeng Liu; Emanuel Ornelas
    Abstract: We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by destroying protectionist rents, thus making democracies last longer. This gives governments in unstable democracies an extra motive to form FTAs. Hence, greater democratic instability induces governments to boost their FTA commitments. In a dataset with 116 countries over 1960-2007, we find robust support for these predictions. They help to rationalize the rapid simultaneous growth of regionalism and of worldwide democratization since the late 1980s.
    Keywords: Regionalism, rent destruction, political regimes, trade liberalization
    JEL: F13 D72 F53 F15
    Date: 2013–01
  19. By: Antonio Avendaño; Hernán Enríquez
    Abstract: Is widely recognized the polycentric structure of modern cities. However, little is known about the economic links between employment subcenters and the CBD, and the economic structure of subcenters. This study focuses in explore spatial relations between clusters of firms located in the same subcenter in Bogota. The methodological strategy is based on nonparametric estimators. First, the identification of subcenters using sectorial employment data is done. The second task examines the economic linkages between each of the subcenters and the CBD. Finally, bivariate Ripley’s K function is estimated in order to identify the presence of spatial clusters and attraction or repulsion relations between economic activities inside the subcenter. The results show that there are ten important employment subcenters, not including the CBD. Most subcenters have complimentary relations with CBD. Finally, only few subcenters have clusters structure well defined by employment activities that are characterized by attract other complimentary economic activities.
    Date: 2012–10–21

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