nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒09‒13
eleven papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Clustering Properties of Merger Waves: Space, Time or Industry? By Florian Szücs
  2. Regional Policy Evaluation:Interactive Fixed Effects and Synthetic Controls By Gobillon, Laurent; Magnac, Thierry
  3. The Location of the UK Cotton Textiles Industry in 1838: a Quantitative Analysis By Crafts, Nicholas; Wolf, Nikolaus
  4. The Effects of Drug Enforcement on Violence in Colombia 1999-2010: A Spatial Econometric Approach By Botero Degiovanni, Hernan
  5. How are global value chains fragmented and extended in China's domestic production networks? By Meng, Bo; Wang, Zhi; Koopman, Robert
  6. Geographic Differences in the Earnings of Economics Majors By Winters, John V.; Xu, Weineng
  7. Is There Convergence of Russia’s Regions? Exploring the Empirical Evidence: 1995 – 2010 By H. Lehmann; M. G. Silvagni
  8. Large panel data models with cross-sectional dependence: a survey By Alexander Chudik; M. Hashem Pesaran
  9. Large sample properties of the matrix exponential spatial specification with an application to FDI By Nicolas Debarsy; Fei Jin; Lung-Fei Lee
  10. Distance as a barrier to health care access in South Africa By Zoë McLaren; Cally Ardington; Murray Leibbrandt
  11. Desigualdades intrarregionais na região nordeste: uma análise de decomposição espacial By Fernando Perobelli; Edson Domingues; Luiz Carlos Ribeiro

  1. By: Florian Szücs
    Abstract: We study the degree of agglomeration of acquisition activity within clusters of temporal, geographic and industrial proximity based on almost 600,000 individual transactions. The findings indicate that significant clustering occurs in time and across industries, while the results on geographic clustering are mixed. This supports the view that merger waves are mostly driven by neoclassical motives.
    Keywords: Merger wave, clustering, acquisitions, neoclassical, behavioral
    JEL: L2 G3
    Date: 2013
  2. By: Gobillon, Laurent (INED and Paris School of Economics); Magnac, Thierry (TSE)
    Abstract: In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained by Bai (2009)'s least squares method with the popular difference in difference estimates as well as with estimates obtained using synthetic control approaches as developed by Abadie and coauthors. We show that difference in differences are generically biased and we derive the support conditions that are required for the application of synthetic controls. We construct an extensive set of Monte Carlo experiments to compare the performance of these estimation methods in small samples. As an empirical illustration, we also apply them to the evaluation of the impact on local unemployment of an enterprise zone policy implemented in France in the 1990s.
    Keywords: Policy evaluation, Linear factor models, Synthetic controls, Economic geography, Enterprise zones
    Date: 2013–07
  3. By: Crafts, Nicholas (University of Warwick); Wolf, Nikolaus (Humboldt University)
    Abstract: We examine the geography of cotton textiles in Britain in 1838 to test claims about why the industry came to be so heavily concentrated in Lancashire. Our analysis considers both first and second nature aspects of geography including the availability of water power, humidity, coal prices, market access and sunk costs. We show that some of these characteristics have substantial explanatory power. Moreover, we exploit the change from water to steam power to show that the persistent effect of first nature characteristics on industry location can be explained by a combination of sunk costs and agglomeration effects.
    Keywords: agglomeration; cotton textiles; geography; industry location
    Date: 2013
  4. By: Botero Degiovanni, Hernan
    Abstract: In this paper paper, I use Mejia and Restrepo's(2011d} strategy to disentangle the causal relationship between drug enforcement and violence. To test this relationship, I use information on Colombian municipalities during the period 1999-2010. Due to technological reasons related to the quality of terrain, climate, and locational characteristics of the Colombian territory, cocaine production is more productive at low altitudes. Using the altitude of each municipality and distance from capital cities as sources of exogenous variation, I estimate the effect of drug enforcement on violence in Colombia. To control for a possible omitted-variable bias in the estimations, I run a Panel Data Spatial Durbin Model (SDM). Additionally, I construct a set of indices with comparable units of measure which allows me to determine which percentage of the Colombian violence data is explained by drug enforcement. The results indicate that the Colombian government's enforcement activities increased in 0.98% the homicide rate and in 1.24% the displacement rate and the war among drug dealers increased in 4.00% the homicide rate and 0.16% the displacement rate in the period 1999-2010.
    Keywords: War, Criminal Law, Enforcement, Drugs
    JEL: H56 K14 K42 L65
    Date: 2013–09–01
  5. By: Meng, Bo; Wang, Zhi; Koopman, Robert
    Abstract: Global value chains are supported not only directly by domestic regions that export goods and services to the world market, but also indirectly by other domestic regions that provide parts, components, and intermediate services to final exporting regions. In order to better understand the nature of a country’s position and degree of participation in global value chains, we need to more fully examine the role of individual domestic regions. Understanding the domestic components of global supply chains is especially important for large developing countries like China and India, where there may be large variations in economic scale and development between domestic regions. This paper proposes a new framework for measuring domestic linkages to global value chains. This framework measures domestic linkages by endogenously embedding a country’s domestic interregional input-output (IO) table in an international IO model. Using this framework, we can more clearly describe how global production is fragmented and extended through linkages across a country’s domestic regions. This framework will also enable us to estimate how value added is created and distributed in both domestic and international segments of global value chains. For examining the validity and usefulness of this new approach, some numerical results are presented and discussed based on the 2007 Chinese interregional IO table, China customs statistics at the provincial level, and World Input-Output Tables (WIOTs).
    Keywords: China, Input-output tables, International trade, Distribution, Value chain, Input-output, Trade in value added
    JEL: C67 F10 O53
    Date: 2013–08
  6. By: Winters, John V. (Oklahoma State University); Xu, Weineng (University of Arkansas, Fayetteville)
    Abstract: Economics has been shown to be a relatively high earning college major, but geographic differences in earnings have been largely overlooked. This paper uses the American Community Survey to examine geographic differences in both absolute earnings and relative earnings for economic majors. We find that there are substantial geographic differences in both the absolute and relative earnings of economics majors even controlling for individual characteristics such as age and advanced degrees. We argue that mean earnings in specific labor markets are a better measure of the benefits of majoring in economics than simply looking at national averages.
    Keywords: economics major, earnings differentials, college education, local labor markets
    JEL: I23 J24 J31 R23
    Date: 2013–08
  7. By: H. Lehmann; M. G. Silvagni
    Abstract: This paper analyzes convergence in per capita gross regional product of Russia’s regions during the period 1995-2010, when regional data are available. Using a panel regression framework we find no evidence for beta-convergence. Instead we find divergence, which is, however, attenuated over time. Robustness checks that use regional real income instead of gross regional product confirm this outcome as do non-parametric estimates of convergence, namely estimates using Markov transition probability matrices and stochastic kernel plots of regional relative income. Decompositions of regional income and gross regional product also find no sigma-convergence of Russian regions. These decompositions point to the geographical concentration of extractive activities in the Urals and of business services and of the public administration in the Moscow area as the main culprit for this lack of convergence. They also establish that despite reforms to equalize provisions of public goods across Russia, the social services sector of the public administration, education and health still do not have the expected equalizing impact on regional income.
    JEL: O47 P25 R11 R12
    Date: 2013–09
  8. By: Alexander Chudik; M. Hashem Pesaran
    Abstract: This paper provides an overview of the recent literature on estimation and inference in large panel data models with cross-sectional dependence. It reviews panel data models with strictly exogenous regressors as well as dynamic models with weakly exogenous regressors. The paper begins with a review of the concepts of weak and strong cross-sectional dependence, and discusses the exponent of cross-sectional dependence that characterizes the different degrees of cross-sectional dependence. It considers a number of alternative estimators for static and dynamic panel data models, distinguishing between factor and spatial models of cross-sectional dependence. The paper also provides an overview of tests of independence and weak cross-sectional dependence.
    Date: 2013
  9. By: Nicolas Debarsy (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans, CERPE - Centre de recherche en Economie Régionale et Politique Economique - Facultés Universitaires Notre Dame de la Paix (FUNDP) - Namur); Fei Jin (SUFE - School of Economics - Shanghai University of Finance and Economics); Lung-Fei Lee (Department of Economics - Ohio State University - Ohio State University)
    Abstract: This paper considers the large sample properties of the matrix exponential spatial specification (MESS) and compares its properties with those of the spatial autoregressive (SAR) model. We find that the quasi-maximum likelihood estimator (QMLE) for the MESS is consistent under heteroskedasticity, a property not shared by the QMLE of the SAR model. For the MESS in both homoskedastic and heteroskedastic cases, consistency is proved and asymptotic distributions are derived. We also consider properties of the generalized method of moments estimator (GMME). In the homoskedastic case, we derive a best GMME that is as efficient as the maximum likelihood estimator under normality and can be asymptotically more efficient than the QMLE under non-normality. In the heteroskedastic case, an optimal GMME can be more efficient than the QMLE asymptotically and the possible best GMME is also discussed. For the general model that has MESS in both the dependent variable and disturbances, labeled MESS(1,1), the QMLE can be consistent under unknown heteroskedasticity when the spatial weights matrices in the two MESS processes are commutative. Also, properties of the QMLE and GMME for the general model are considered. The QML approach for the MESS model has the computational advantage over that of a SAR model. The computational simplicity carries over to MESS models with any finite order of spatial matrices. No parameter range needs to be imposed in order for the model to be stable. Furthermore, the Delta method is used to derive test statistics for the impacts of exogenous variables on the dependent variable. Results of Monte Carlo experiments for finite sample properties of the estimators are reported. Finally, the MESS(1,1) is applied to Belgium's outward FDI data and we observe that the dominant motivation of Belgium's outward FDI lies in finding cheaper factor inputs.
    Keywords: Spatial autocorrelation ; MESS ; QML ; GMM ; Heteroskedasticity ; Delta method ; FDI
    Date: 2013–09–04
  10. By: Zoë McLaren (Department of Health Management and Policy, School of Public Health, University of Michigan); Cally Ardington (SALDRU, School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town)
    Abstract: Access to health care is a particular concern given the centrality of poor access in perpetuating poverty and inequality. South Africa's apartheid history leaves large racial disparities in access despite post-apartheid health policy to increase the number of health facilities, even in remote rural areas. However, even when health services are provided free of charge, monetary and time costs of travel to a local clinic may pose a significant barrier for vulnerable segments of the population, leading to overall poorer health. Using new data from the first nationally representative panel survey in South Africa together with administrative geographic data from the Department of Health, we investigate the role of distance to the nearest facility on patterns of health care utilization. We find that many apartheid legacies remain in place. Ninety percent of South Africans live within 7km of the nearest public clinic, and two-thirds live less than 2km away. However, 15% of Black African adults live more than 5km from the nearest facility, in contrast to only 7% of coloureds and 4% of whites. There is a clear income gradient in proximity to public clinics. Also, we find distance decay in the uptake of important health services such as having a skilled birth attendant, an immunization record and a growth chart for children. The poorest tend to reside furthest from the nearest clinic and an inability to bear travel costs constrains them to lower quality health care facilities. Within this general picture, men and women have different patterns of health care utilization, with the reduction in utilization of health care associated with distance being larger for men than it is for women. Much has been done to redress disparities in South Africa since the end of apartheid but progress is still needed to achieve equity in health care access.
    Keywords: Health care access, inequality, South Africa
    Date: 2013
  11. By: Fernando Perobelli (FEA/UFJF); Edson Domingues (Cedeplar-UFMG); Luiz Carlos Ribeiro (Cedeplar-UFMG)
    Abstract: The aim of this paper is to investigate intraregional inequalities in the brazilian Northeast region, from the differentiation of its productive structure. For this, the analysis applies space decomposition inspired by Feldman et al. (1987) and adapted according to the proposed of Dietzenbacher et al. (2000) and Jackson and Dzikowski (2002). The database is the Input-Output Matrix of Northeast and States (GUILHOTO et al., 2010), base year 2004, with 111 economic sectors and 10 regions (9 northeast states and rest of Brazil). The main results showed that the final demand plays an important role in determining the product´s difference of the activities related to the Services segment, especially in the states of Bahia, Ceará and Pernambuco. On the other hand, the final demand is not responsible for differences in product among some agriculture and livestock activities, sectors linked to the food industry and the production of tobacco. Moreover, the final demand does not explain the differences in the production of virtually all activities of the states of Alagoas, Maranhão, Paraíba, Piauí, Sergipe and Rio Grande do Norte.
    Keywords: Input-output; spatial decomposition analysis; Northeast region.
    JEL: R15
    Date: 2013–08

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