nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒03‒16
seventeen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Spatial migration. By Carmen Camacho
  2. Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions By Katharina Pijnenburg
  3. Dynamics and Spatial Distribution of Global Nighttime Lights By Nicola Pestalozzi; Peter Cauwels; Didier Sornette
  4. Veblen in the Metropolis: Land Use Proximity in United States Urban Landscapes. By E. Anthon Eff
  5. Regional income convergence in India: A Bayesian Spatial Durbin Model approach By Soundararajan, Pushparaj
  6. Decomposing European NUTS2 regional inequality from 1980 to 2009: national and European policy implications By Doran, Justin; Jordan, Declan
  7. The economic consequences of crime in Italy By O.A. Carboni; Claudio Detotto
  8. Robust Equilibria in Location Games By Berno Buechel; Nils Röhl
  9. Where the Streets Have a Name: Income Comparisons in the US By Abel Brodeur; Sarah Flèche
  10. Home-Host Country Distance in Offshore Governance Chocies By Julien Gooris; Carine Peeters
  11. Heterogeneous Firms, Globalization and the Distance Puzzle By Larch, Mario; Norbäck, Pehr-Johan; Sirries, Steffen
  12. Robust Control of a Spatially Distributed Commercial Fishery By William A. Brock; Anastasios Xepapadeas; Athanasios. N. Yannacopoulos
  13. Knowledge-intensive employment growth in the Dutch Randstad and the German Rhine-Ruhr area: the impact of centrality and peripherality By Kronenberg, Kristin; Volgmann, Kati
  14. Can Global Value Chains Effectively Serve Regional Economic Development in Asia? By Brunner, Hans-Peter
  15. Spatial targeting of agri-environmental policy and urban development By Thomas Coisnon; Walid OUESLATI; Julien Salanié
  16. Does International Migration Increase Child Labor By Anna DePaoli; Mariapia Mendolat
  17. Estimating the cost of air pollution in South East Queensland: An application of the life satisfaction non-market valuation approach By Christoper L Ambrey; Christopher M Fleming; Andrew Yiu-Chung Chan

  1. By: Carmen Camacho (Centre d'Economie de la Sorbonne)
    Abstract: We develop a model economy adapting Hotelling's migration law to make individuals react to the gradient of their indirect utility. In a first version, individuals respond uniquely to utility differences. In a second phase, we insert our migration law as a dynamic constraint in a spatial model of economic growth in which a policy maker maximizes overall welfare. In both cases we prove the existence of a unique solution under certain assumptions and for each initial distribution of human capital. We illustrate some extremely interesting properties of the economy and the associated population dynamics through numerical simulations. In the decentralized case in which a region enjoys a temporal technological advantage, an agglomeration in human capital emerges in the central area, which does not coincide with the technologically advanced area. In the complete model, initial differences in human capital can trigger everlasting inequalities in physical capital.
    Keywords: Migration, spatial dynamics, economic growth, parabolic PDE, optimal control.
    JEL: J6 C61 R11 R12 R13
    Date: 2013–02
  2. By: Katharina Pijnenburg
    Abstract: The self-employment rate includes entrepreneurs out of opportunity and entrepreneurs out of necessity. While the effect of opportunity entrepreneurs on economic development should be positive, there should be no or a negative effect of necessity entrepreneurship. We use a geographically weighted regression (GWR) approach to analyze whether the effect of self-employment on economic development is heterogeneous across European NUTS-2 regions. We find that regions having a significant positive effect of self-employment on economic development in the GWR estimation have, on average, a lower self-employment rate than regions with a significant negative effect. The concept of equilibrium rate of entrepreneurship is applied in an attempt to estimate a level of the self-employment rate from which relatively more entrepreneurs are self-employed out of necessity than out of opportunity. We find that in regions where the self-employment rate is above the equilibrium rate, self-employment has indeed a negative effect, while in regions where it is below the equilibrium rate the effect is positive.
    Keywords: self-employment, economic performance, geographically weighted regression
    JEL: C21 L26 R11
    Date: 2013
  3. By: Nicola Pestalozzi; Peter Cauwels; Didier Sornette
    Abstract: Using open source data, we observe the fascinating dynamics of nighttime light. Following a global economic regime shift, the planetary center of light can be seen moving eastwards at a pace of about 60 km per year. Introducing spatial light Gini coefficients, we find a universal pattern of human settlements across different countries and see a global centralization of light. Observing 160 different countries we document the expansion of developing countries, the growth of new agglomerations, the regression in countries suffering from demographic decline and the success of light pollution abatement programs in western countries.
    Date: 2013–03
  4. By: E. Anthon Eff
    Abstract: Some land uses are considered incompatible. When a parcel is bordered by parcels with incompatible land uses, external costs will impact the property owner. Collective action by property owners then results in land use regulations designed to restrict neighboring parcels from incompatible uses. The pattern of observed land use contiguities thus testifies to cultural notions regarding incompatible land uses. Using urban planning data, a GIS, and methods from social network analysis, this paper attempts to uncover the tacit rules of spatial proximity among land uses in a United States city. The most salient patterns are a separation between places of residence and places of work, a separation of single family homes from other residential land uses, a separation of rural land uses from everything else, and a separation of condominiums from everything else. The paper then attempts to tie these observed spatial patterns to ideas from Thorstein Veblen, Georg Simmel, and Mancur Olson. It is suggested that the United States urban landscape has been shaped by the ethos of the middle class under capitalism, especially the cult of the family and the need to display status.
    Keywords: built environment; symbolism; land use patterns
    JEL: R14 Z13
    Date: 2013–03
  5. By: Soundararajan, Pushparaj
    Abstract: A debate on the regional disparity is always an interesting topic. This study analysed the regional income disparity in India during 1980 – 2010, which contains pre, early and later reform periods. The study used per capita GSDP data from Central Statistical Organisation. First, the study reviewed various growth models and suggests that spatial durbin model of Fingleton and Lopez-Bazo(2006) is empirically useful. Second, this study estimated parameters of Bayesian Spatial Durbin Model and disscussed the convergence hypothesis in the light of LeSange and Fischer (2008) formulation. The study concludes that the later reform period has witnessed beta convergence due to feedback effect.
    Keywords: Convergence, Regional, Spatial Durbin Model and Bayesian
    JEL: C11 C21 R12
    Date: 2013–03–05
  6. By: Doran, Justin; Jordan, Declan
    Abstract: Purpose – The purpose of this paper is to analyse income inequality for a sample of 14 European countries and their composite regions using data from the Cambridge Econometrics regional dataset from 1980 to 2009. The purpose of the paper is to provide insight into the dynamics of regional and national cohesion among the EU-14 countries studied. Design/methodology/approach – Initially, inequality is decomposed using the Theil coefficient into between and within country inequality to assess the extent to which convergence has occurred. To investigate the underlying causes of the changes in inequality, the Theil coefficient is further decomposed to assess the contribution of productivity and employment-population ratio differentials to inequality. Findings – The results indicate that while between-country inequality has declined, within-country inequality has increased by approximately 50 percent. Subsequent decomposition indicates that while productivity levels among regions have converged, the employment-population ratios have diverged substantially driving increasing levels of inequality. This suggests that while EU cohesion policies have reduced productivity inequalities they have had little effect in stimulating convergence of employment-population ratios across regions. Research limitations/implications – The paper argues that national priorities, particularly in the context of the current European economic crisis, are likely to hinder European Union level policies to reduce income inequality at a regional level. This may result in further increases in regional inequality among European regions. Originality/value – This paper's main contribution is to highlight how national convergence can lead to regional divergence being overlooked. The value of the paper is that it provides policy insights, based on empirical evidence, for European cohesion policy.
    Keywords: Europe, Convergence, Cohesion Policy
    JEL: O1 R10
    Date: 2013
  7. By: O.A. Carboni; Claudio Detotto
    Abstract: This paper employs provincial data to study the relationship between several crime typologies, namely murder, theft, robbery and fraud, and economic output in Italy. We employ a spatial econometric approach where the spatial proximity is defined by a measure of physical distance between locations, in order to take into account possible spill-over effects. The model used here combines a spatial autoregressive model with autoregressive disturbances. In modelling the outcome for each location depends on a weighted average of the outcomes of other locations. Outcomes are determined simultaneously. The results of the spatial two stage least square estimation suggest that the homicide rate has a negative impact on Italian gross domestic product while theft, robbery and fraud do not affect economic output and that there are beneficial spill-overs from neighbouring provinces.
    Keywords: spatial weights; spatial models; growth; crime; crowding-out effect
    JEL: K10 R11 O18 C31
    Date: 2013
  8. By: Berno Buechel (University of Hamburg); Nils Röhl (University of Paderborn)
    Abstract: In the framework of spatial competition, two or more players strategically choose a location in order to attract consumers. It is assumed standardly that consumers with the same favorite location fully agree on the ranking of all possible locations. To investigate the necessity of this questionable and restrictive assumption, we model heterogeneity in consumers' distance perceptions by individual edge lengths of a given graph. A profile of location choices is called a ``robust equilibrium'' if it is a Nash equilibrium in several games which differ only by the consumers' perceptions of distances. For a finite number of players and any distribution of consumers, we provide a full characterization of all robust equilibria and derive structural conditions for their existence. Furthermore, we discuss whether the classical observations of minimal differentiation and inefficiency are robust phenomena. Thereby, we find strong support for an old conjecture that in equilibrium firms form local clusters.
    Keywords: spatial competition, Hotelling-Downs, networks, graphs, Nash equilibrium, median, minimal differentiation
    JEL: C72 D49 P16 D43
    Date: 2013–02
  9. By: Abel Brodeur (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Sarah Flèche (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper analyses how neighbors' income affect agents' well-being using unprecedented data from the BRFSS and the City of Somerville. We conduct a multi-scale approach at the county, ZIP code and street-levels and find that the association between well-being and neighbors' income follows an inverted U-shaped pattern in the size of the area. We find a negative relationship between well-being and neighbors' income in the county of residence, but the opposite at the ZIP code-level. Our results are consistent with the fact that agents enjoy living in a rich ZIP code but also having poor faraway neighbors since they have preferences for high social status. We test explicitly this interpretation by including amenities and the relative rank in the local income distribution in our model. At the street-level, we find a negative association between neighbors' income and self-reported well-being indicating the presence of income comparisons between very close neighbors.
    Keywords: Income comparisons ; Rank ; Relative utility ; Social interactions ; Social staut ; Well-being
    Date: 2013–02–27
  10. By: Julien Gooris; Carine Peeters
    Abstract: This paper studies the effect of home-host country distance on the choice ofgovernance mode in service offshoring. Using a Transaction Cost Economicsapproach, we explore the comparative costs of the hierarchical and contractualmodels to show that different dimensions of distance (geographic, cultural andinstitutional), because they generate different types of uncertainties, impactoffshore governance choices in different ways. Empirical results confirm that, onthe one hand, firms are more likely to respond to internal uncertainties resultingfrom geographic and cultural distance by leveraging the internal controls andcollaboration mechanisms of a captive offshore service center. On the other hand,they tend to respond to external uncertainties resulting from institutional distanceby limiting their foreign commitment and leveraging the resources and localexperience of third party service providers. Finally, we find that the temporaldistance component (time zone difference) of geographical dispersion betweenonshore and offshore countries plays a dominant role over the spatial distancecomponent.
    Keywords: offshoring; home-host country distance; governance mode; global value chains; transaction cost economics; logistic regression
    Date: 2013–02
  11. By: Larch, Mario (University of Bayreuth); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Sirries, Steffen (University of Bayreuth)
    Abstract: Despite the strong pace of globalization, the distance effect on trade is persistent or even growing over time (Disdier and Head, 2008). To solve this distance puzzle, we use the recently developed gravity equation estimator from Helpman, Melitz and Rubinstein (2008), HMR henceforth. Using three different data sets, we find that the distance coefficient increases over time when OLS is used, while the non-linear estimation of HMR leads to a decline in the distance coefficient over time. The distance puzzle thus arises from a growing bias of OLS estimates. The latter is explained by globalization more significantly reducing the downward bias from omitting zero trade flows than it reduces the upward bias from omitting the number of heterogeneous exporting firms. Furthermore, we show that including zero-trade flows cannot solve the distance puzzle when using HMR. The HMR estimates are strongly correlated with the time pattern in freight costs reported by Hummels (2007).
    Keywords: Distance puzzle; Gravity estimation; Zero trade flows; Firm heterogeneity
    JEL: F13 F14 F23
    Date: 2013–03–05
  12. By: William A. Brock (Department of Economics, University of Wisconsin, and Department of Economics, University of Missouri); Anastasios Xepapadeas (Department of International and European Economic Studies, Athens University of Economics and Business); Athanasios. N. Yannacopoulos (Department of Statistics, Athens University of Economics and Business)
    Abstract: We consider a robust control model for a spatially distributed commercial fishery under uncertainty, and in particular a tracking problem, i.e. the problem of robust stabilization of a chosen deterministic benchmark state in the presence of model uncertainty. The problem is expressed in the form of a stochastic linear quadratic robust optimal control problem, which is solved analytically. We focus on the emergence of breakdown from the robust stabilization policy, called hot spots, and comment upon their significance concerning the spatiotemporal behaviour of the system.
    Keywords: Spatiotemporal Dynamics, Model Uncertainty, Robust Control, Fishery
    JEL: D81 R12 Q22 C6
    Date: 2013–02
  13. By: Kronenberg, Kristin; Volgmann, Kati
    Abstract: This paper investigates to what extent the different subsectors of the knowledge economy are subject to sector-specific spatial patterns of employment dynamics, and whether these patterns are conditional upon the general economic climate in a particular region. To this end, we analyze and compare patterns of employment growth in the knowledge economy and its subsectors in the different settlement zones of the (growing) Dutch Randstad and the (declining) German Rhine-Ruhr area, thus investigating the impact of centrality respectively peripherality within a polycentric metropolitan region on municipal knowledge-intensive employment growth. Our results show that with respect to knowledge-intensive employment, both the Randstad and the Rhine-Ruhr area exhibit sector-specific spatial patterns of employment dynamics. Furthermore, centrality and peripherality are found to play important roles in determining municipal knowledge-intensive employment growth, suggesting that the location of a municipality within a metropolitan region affects its employment dynamics, and this impact differs both between sectors, and between regions being subject to either growth or decline.
    Keywords: employment growth, knowledge economy, settlement structure, the Netherlands, Germany, metropolitan region, centrality, peripherality
    JEL: O18 R11 R12
    Date: 2013–03–05
  14. By: Brunner, Hans-Peter (Asian Development Bank)
    Abstract: Regional economic integration through logistics, information network and connectivity improvement can increase the 'virtual size' of an economy as trade with neighboring countries increases. This leads to substantial benefits from scale, network, coordination and agglomeration economies. As is shown, especially in small economies and LDCs, regional economic integration induces the necessary rebalancing needed for integration of the regional portions of Global Value Chains (GVCs) to the global portions of GVCs. This paper demonstrates this with South Asian case studies in GVC development and with the related mapping methodology. This methodology traces a product through an entire channel across a region, from the point of product conception to the point of consumption. As an appropriate set of investment and policy measures is undertaken across a region, it can as we show in the paper, lead to a substantially ‗rebalanced‘ way of income growth.
    Keywords: Rebalancing; spatial distribution of growth; regional economic integration; South Asia; value chains
    JEL: C15 F12 F15 O18 R12
    Date: 2013–03–01
  15. By: Thomas Coisnon (UMR GRANEM - UMR MA 49 – Université d'Angers et Agrocampus Ouest - Université d'Angers); Walid OUESLATI (UMR GRANEM - UMR MA 49 – Université d'Angers et Agrocampus Ouest - Université d'Angers); Julien Salanié (Granem - Groupe de Recherche ANgevin en Economie et Management - Agrocampus Ouest - Institut national de la recherche agronomique (INRA) : UMR49)
    Abstract: Widespread public support exists for the provision of natural amenities, such as lakes, rivers or wetlands, and for efforts to preserve these from agricultural pollution. Agri-environmental policies contribute to these efforts by encouraging farmers to adopt environmentally friendly practices within the vicinity of these ecosystems. A spatially targeted agri-environmental policy promotes natural amenities and may thereby affect household location decisions. The purpose of this paper is to investigate the extent of these impacts on the spatial urban structure. We extend a monocentric city model to include farmers' responses to an agri-environmental policy. Our main findings are that the implementation of a spatially targeted agri-environmental policy may lead to some additional urban development, which could conflict with the aim of the policy.
    Keywords: Land development; Urban sprawl; Leapfrog; Land rent; Monocentric model; Farming; Agri-environmental policy; Spatial targeting; Agricultural pollution.
    Date: 2013–02
  16. By: Anna DePaoli; Mariapia Mendolat
    Abstract: Global international migration may influence child labor through a labor market effect. We empirically investigate this issue by using an original cross-country survey dataset, which combines information on international emigration flows with detailed individual-level data on child labor at age 5-15 in a wide range of developing countries. By using variation in the emigration supply shocks across labor market units defined on the basis of both geography and skill, we estimate a set of child labor equations where the variable of interest is the interactive effect between parental skill and country-level emigration shocks. We measure the latter through different indicators including a direct measure of the relative skill composition of emigrants relative to the resident population in the country of origin. Overall, after controlling for a large set of individual-level characteristics, remittances, and country fixed effects, our findings are consistent with predictions and show that international out-migration may significantly reduce child labor in disadvantaged households through changes in the local labor market.
    Keywords: International Migration, Child Labor, Factor Mobility, Cross-country Survey Data
    JEL: F22 F1 J61
    Date: 2013–02
  17. By: Christoper L Ambrey; Christopher M Fleming; Andrew Yiu-Chung Chan
    Keywords: Air pollution, happiness, Household Income and Labour Dynamics in Australia (HILDA), Geographic Information Systems (GIS), life satisfaction
    JEL: Q53 Q51 C21
    Date: 2013–02

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