nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒01‒24
sixteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Natural amenities, neighborhood dynamics, and persistence in the spatial distribution of income By Lee, Sanghoon; Lin, Jeffrey
  2. Towards a Developmental Turn in Evolutionary Economic Geography? By Ron Martin; Peter Sunley
  3. The evolution of networks of innovators within and across borders: Evidence from patent data By Andrea Morescalchi; Fabio Pammolli; Orion Penner; Alexander M. Petersen; Massimo Riccaboni
  4. Immigrants’ location choice in Belgium By Hubert JAYET; Glenn RAYP; Ilse RUYSSEN; Nadiya UKRAYINCHUK
  5. Coal and the European Industrial Revolution By Alan Fernihough; Kevin Hjortshøj O'Rourke
  6. Exploring the Evolution of Innovation Networks in Science-driven and Scale-intensive Industries: New Evidence from a Stochastic Actor-based Approach By T. Buchmann; D. Hain; Muhamed Kudic; M. Müller
  7. Does Culture Affect Local Productivity and Urban Amenities? By Brahim Boualam
  8. On Convergence in the Spatial AK Growth Models By Gani Aldashev; Serik Aldashev; Timoteo Carletti
  9. Trust your neighbour. Industrial relatedness, social capital and outsourcing By Roberto Antonietti; Maria Rosaria Ferrante; Riccardo Leoncini
  10. Banks, industrial relatedness and firms’ investments By Roberto Antonietti; Giulio Cainelli; Monica Ferrari; Stefania Tomasini
  11. Tunisian Coastal Cities Attractiveness and Amenities By Ben said, Foued
  12. Trade margins, transport cost thresholds and market areas: Municipal freight flows and urban hierarchy By Diaz-Lanchas, Jorge; Llano, Carlos; Zofío, José Luis
  13. Ethnic Spatial Dispersion and Immigrant Identity By Constant, Amelie F.; Schüller, Simone; Zimmermann, Klaus F.
  14. Your very private job agency : job referrals based on residential location networks By Hawranek, Franziska; Schanne, Norbert
  15. Why and Wherefore of Increased Scientific Collaboration By Richard B. Freeman; Ina Ganguli; Raviv Murciano-Goroff
  16. The Cost of Collateralized Borrowing in the Colombian Money Market: Does Connectedness Matter? By Constanza Martínez; Carlos León

  1. By: Lee, Sanghoon (University of British Columbia); Lin, Jeffrey (Federal Reserve Bank of Philadelphia)
    Abstract: We present theory and evidence highlighting the role of natural amenities in neighborhood dynamics, suburbanization, and variation across cities in the persistence of the spatial distribution of income. Our model generates three predictions that we confirm using a novel database of consistent-boundary neighborhoods in U.S. metropolitan areas, 1880{2010, and spatial data for natural features such as coastlines and hills. First, persistent natural amenities anchor neighborhoods to high incomes over time. Second, downtown neighborhoods in coastal cities were less susceptible to the suburbanization of income in the mid-20th century. Third, naturally heterogeneous cities exhibit spatial distributions of income that are dynamically persistent.
    Keywords: Neighborhood change; Suburbanization; Locational fundamentals; Multiple equilibria
    JEL: N90 O18 R23
    Date: 2013–12–06
  2. By: Ron Martin; Peter Sunley
    Abstract: Over the past couple of decades or so, there have been increasing moves within evolutionary theory to move beyond the neo-Darwinian principles of variety, selection and retention, and to incorporate development. This has led to a richer palette of concepts, mechanisms and models of evolution and change, such as plasticity, robustness, evolvability, emergence, niche construction, and selforganisation, This opens up a different framework for understanding evolution. In this paper we set out the main characteristics of the recent and ongoing ‘developmental turn’ in evolutionary theory, and suggest how these might inform a corresponding ‘developmental turn’ in evolutionary economic geography.
    Keywords: Evolutionary economic geography, Generalised Darwinism, Evolutionary developmental biology, Developmental systems theory, Plasticity, Robustness, Evolvability, Emergence, Self organisation
    Date: 2014–01
  3. By: Andrea Morescalchi (IMT Lucca Institute for Advanced Studies); Fabio Pammolli (IMT Lucca Institute for Advanced Studies); Orion Penner (IMT Lucca Institute for Advanced Studies); Alexander M. Petersen (IMT Lucca Institute for Advanced Studies); Massimo Riccaboni (IMT Lucca Institute for Advanced Studies)
    Abstract: Recent studies on the geography of knowledge networks have documented a negative impact of physical distance and institutional borders upon research and development (R&D) collaborations. Though it is widely recognized that geographic constraints and national borders impede the diffusion of knowledge, less attention has been devoted to the temporal evolution of these constraints. In this study we use data on patents filed with the European Patent Office (EPO) for OECD countries to analyze the impact of physical distance and country borders on inter-regional links in four different networks over the period 1988-2009: (1) co-inventorship, (2) patent citations, (3) inventor mobility and (4) the location of R&D laboratories. We find the constraint imposed by country borders and distance decreased until mid-1990s then started to grow, particularly for distance. We further investigate the role of large innovation "hubs" as attractors of new collaboration opportunities and the impact of region size and locality on the evolution of cross-border patenting activities. The intensity of European cross-country inventor collaborations increased at a higher pace than their non-European counterparts until 2004, with no significant relative progress thereafter. Moreover, when analyzing networks of geographical mobility, multinational R&D activities and patent citations we cannot detect any substantial progress in European research integration above and beyond the common global trend.
    Keywords: Geography of knowledge, Networks of Innovators, European integration, Spatial proximity, Cross-border collaboration, Gravity model
    JEL: O31 O38 R12 R23 D89
    Date: 2014–01
  4. By: Hubert JAYET (Université Lille 1, EQUIPPE); Glenn RAYP (Ghent University, SHERPPA); Ilse RUYSSEN (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Ghent University, SHERPPA); Nadiya UKRAYINCHUK (Université de Lille 2, EQUIPPE)
    Abstract: This paper analyses migratory streams to Belgian municipalities between 1994-2007. The Belgian population register constitutes a rich and unique database of yearly migrant in inflows and stocks broken down by nationality, which allows us to empirically explain the location choice of immigrants at municipality level. Specifically, we aim at separating the network effect, captured by the number of previous arrivals, from other location-specific characteristics such as local labor or housing market conditions and the presence of public amenities. We expect labor and housing market variables to operate at different levels and develop a nested model of location choice in which an immigrant first chooses a broad area, roughly corresponding to a labor market, and subsequently chooses a municipality within this area. We find that the spatial repartition of immigrants in Belgium is determined by both network effects and local characteristics. The determinants of local attractiveness vary by nationality, as expected, but for all nationalities, they seem to dominate the impact of network effects.
    Keywords: International migration, Location choice, Network effects, Nested logit
    Date: 2014–01–20
  5. By: Alan Fernihough; Kevin Hjortshøj O'Rourke
    Abstract: We examine the importance of geographical proximity to coal as a factor underpinning comparative European economic development during the Industrial Revolution. Our analysis exploits geographical variation in city and coalfield locations, alongside temporal variation in the availability of coal-powered technologies, to quantify the effect of coal availability on historic city population sizes. Since we suspect that our coal measure could be endogenous, we use a geologically derived measure as an instrumental variable: proximity to rock strata from the Carboniferous era. Consistent with traditional historical accounts of the Industrial Revolution, we find that coal had a strong influence on city population size from 1800 onward. Counterfactual estimates of city population sizes indicate that our estimated coal effect explains at least 60% of the growth in European city populations from 1750 to 1900. This result is robust to a number of alternative modelling assumptions regarding missing historical population data, spatially lagged effects, and the exclusion of the United Kingdom from the estimation sample.
    JEL: J10 N13 N53 O13 O14
    Date: 2014–01
  6. By: T. Buchmann; D. Hain; Muhamed Kudic; M. Müller
    Abstract: Our primary goal is to analyse the drivers of evolutionary network change processes by using a stochastic actor-based simulation approach. We contribute to the literature by combining two unique datasets, concerning the German laser and automotive industry, between 2002 and 2006 to explore whether geographical, network-related, and techno-logical determinants affect the evolution of networks, and if so, as to what extent these determinants systematically differ for science-driven industries compared to scale-intensive industries. Our results provide empirical evidence for the explanatory power of network-related determinants in both industries. The ‘experience effect’ as well as the ‘transitivity effects’ are significant for both industries but more pronounced for laser manufacturing firms. When it comes to ‘geographical effects’ and ‘technological ef-fects’ the picture changes considerably. While geographical proximity plays an important role in the automotive industry, firms in the laser industry seem to be less dependent on geographical closeness to cooperation partners; instead they rather search out for cooperation opportunities in distance. This might reflect the strong dependence of firms in science-driven industries to access diverse external knowledge, which cannot necessarily be found in the close geographical surrounding. Technological proximity negatively influences cooperation decisions for laser source manufacturers, yet has no impact for automotive firms. In other words, technological heterogeneity seems to ex-plain, at least in science-driven industries, the attractiveness of potential cooperation partners.
    Keywords: network evolution, innovation network, automotive industry, laser industry, SIENA
    JEL: O32 C41 D85
    Date: 2014–01
  7. By: Brahim Boualam
    Abstract: Does a better cultural milieu make a city more livable for residents and improve its business environment for firms? I address this question by computing a measure of cultural specialization based on detailed occupational data for 346 U.S. metropolitan areas. I then estimate hedonic wage and rent equations and ask if differences in the cultural environment across cities capitalize into housing price and wage differentials. Simple correlations replicate standard results from the literature: cities that are more specialized in cultural and artistic occupations enjoy higher factor prices. Using time-series data, controlling for observable and unobservable city characteristics, and implementing alternative specifications weaken the magnitude of this effect. Estimations correcting for reverse causality and endogeneity ultimately show that the impact of culture on city attractiveness is negligible at best. Even though the arts and culture might be appealing to some people and firms, such determinants are not strong enough to affect factor prices at the metropolitan level.
    Keywords: Urban economics, location choice, local amenities, culture.
    Date: 2013–12
  8. By: Gani Aldashev; Serik Aldashev; Timoteo Carletti
    Abstract: Recent research in economic theory attempts to study optimal economic growth and spatial location of economic activity in a unified framework. So far, the key result of this literature - asymptotic convergence, even in the absence of decreasing returns to capital - relies on specific assumptions about the objective of the social planner. We show that this result does not depend on such restrictive assumptions and obtains for a broader class of objective functions. We also generalize this finding, allowing for the time-varying technology parameter, and provide an explicit solution for the dynamics of spatial distribution of the capital stock.
    Date: 2014–01
  9. By: Roberto Antonietti; Maria Rosaria Ferrante; Riccardo Leoncini
    Abstract: Relying on a unique dataset of small, machine-tool firms located in Emilia Romagna, Italy, we estimate the separate effects of industrial relatedness and social capital on the propensity to fully or partially outsource production activities. We focus on a series of 29 production phases, for which we have information on whether they are accomplished in-house or outside the firm. After controlling for endogeneity, we find that: (i) full outsourcing is positively related to social capital, but this effect vanishes as industrial proximity with neighbouring firms increases; and (ii) firms engage in concurrent sourcing only when industrial relatedness with neighbouring firms is high. Also phase estimates show that: (iii) while social capital matters for full outsourcing of core activities, for full outsourcing of peripheral activities it is industrial relatedness that is relevant; and (iv) there is no significant effect of either industrial relatedness or social capital on the concurrent sourcing of core and peripheral activities.
    Keywords: concurrent sourcing, full outsourcing, industrial relatedness, social capital, machine-tool industry
    JEL: A13 D23 L23 L24 L64 R12
    Date: 2014–01
  10. By: Roberto Antonietti; Giulio Cainelli; Monica Ferrari; Stefania Tomasini
    Abstract: In this paper, we study whether industrial relatedness affects firms’ fixed investment behaviour, and whether this relationship is linked also to the operational and organizational proximity between banks and local economies. By estimating different specifications of a dynamic investment equation on an unbalanced panel of Italian manufacturing firms for the period 2000-2007, we find that industrial relatedness boosts fixed investments by lowering their sensitivity to cash flow. This occurs because in technologically related areas banks benefit from lower screening and monitoring costs, easier re-allocation of property rights, and higher likelihood of establishing extended credit relationships with firms. However, we find also that the positive effect of industrial relatedness on investments disappears as the functional distance between local branches and their headquarters increases: more hierarchical and less embedded banks find it more difficult to collect tacit information on inter-firm production and financial linkages at the local level and therefore reduce credit provision.
    Keywords: error correction model, fixed investments, industrial relatedness, functional distance, operational proximity
    JEL: G21 G34 L60 O12 R51
    Date: 2014–01
  11. By: Ben said, Foued
    Abstract: The aim of this paper is to explain the density variation among coastal cities by the availability of amenities inside cities. A spatial index of cities attractiveness is computed using the Kulldorff scan statistic technique. Spatial pattern of density clusters revealed that north delegations are more attractive than south delegations and historical business centers of big cities become less attractive for residential population. To assess the spatial interdependence between delegations and the impact of amenities on spatial density pattern we use a spatial Durbin model. Estimation results show delegations with high level of basic amenities like health and educational amenities are the more attractive. Delegations with high level of luxury amenities like clinics kids clubs and post offices exert a positive spillover effect on surrounding delegations. The lack of hospitals in a typical delegation exerted a negative indirect effect on population density inside surrounding delegations.
    Keywords: : urban population density, amenities, coastal cities, spatial Durbin model, scan statistic.
    JEL: C21 J1 O18 R23
    Date: 2014–01–15
  12. By: Diaz-Lanchas, Jorge (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Llano, Carlos (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: Recent research has determined the existence of a border effect on trade flows within a country associated to agglomeration economies, the size of the spatial unit of reference, as well as to alternative measures of transport costs. Using a micro-database on road freight shipments within Spain for the period 2003-2007, we consistently decompose the total value of municipal freight flows into the extensive and intensive margins at the European Nuts-5 (municipal), 3 (provincial) and 2 (regional) levels and study the impeding effect of actual generalized transport costs (as opposed to proxies given by the standard measures of distance and travel time). Establishing the superiority of this generalized measure of transport costs, we confirm the accumulation of trade flows up to a transport cost value of 330 euros, and conclude that this high density is not explained by the existence of administrative limits (border effects) but to significant changes in the trade flows-transport costs relationship. While this high density of trade coincides with low level administrative borders (municipal and provincial) as there is a positive and significant effect associated to them on all trade decomposition, it is not significant, or even negative, at a larger regional level. To support this hypothesis, we identify significant thresholds in the trade flows-transport costs relationship that are calculated by way of the Chow test of structural change. These breakpoints allow us to split the sample and control for successive administrative borders in both the extensive and intensive margins. Relying on these thresholds we define relevant market areas corresponding to specific transport costs values that portrait a consistent urban hierarchy system of the largest Spanish cities within a radius of about 330 euros, thereby providing clear evidence of the predictions made by the central place theory.
    Keywords: Municipal Freight Flows; Transport Costs; Breakpoints; Market Areas; Urban Hierarchy; Central Place Theory.
    JEL: F14 F15 O18
    Date: 2013–12
  13. By: Constant, Amelie F. (George Washington University, Temple University); Schüller, Simone (IRVAPP); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Ethnic groups tend to agglomerate and assemble, mostly in urban areas. While ethnic clustering is critically debated in societies and the consequences for economic outcomes are under debate in research, the process is not yet well understood. A separate literature has also examined the cultural and ethnic identity of immigrants and how these affect their economic performance and societal integration. However, an unexplored channel connects ethnic clustering with ethnic identity formation. Therefore this paper examines the role of ethnic geographic clustering in the sociocultural integration of immigrants. It employs survey data from the German Socio-Economic Panel, combined with disaggregated information at a low geographical level from the unexploited German full census of 1970 and 1987. We employ the exogenous placement of immigrants during their recruitment in the 1960s and 1970s and find that local co-ethnic concentration affects immigrants' cultural integration. Residential ethnic clustering strengthens immigrants' retention of an affiliation with their respective country of origin and weakens identification with the host society. The effects are nonlinear and only become significant at relatively high levels of co-ethnic concentration for the minority identity and at very low levels of local concentration for the majority identity. Our findings are robust to the use of an instrumental variable approach.
    Keywords: ethnic minorities, residential segregation, ethnic identity, spatial dispersion, ethnic enclaves
    JEL: J15 R23 Z10
    Date: 2013–12
  14. By: Hawranek, Franziska; Schanne, Norbert (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper analyzes job referral effects that are based on residential location. We use georeferenced record data for the entire working population (liable to social security) and the corresponding establishments in the Rhine-Ruhr metropolitan area, which is Germany's largest (and EU's second largest) metropolitan area. We estimate the propensity of two persons to work at the same place when residing in the same neighborhood (reported with an accuracy of 500m×500m grid cells), and compare the effect to people living in adjacent neighborhoods. We find a significant increase in the probability of working together when living in the same neighborhood, which is stable across various specifications. We differentiate these referral effects for socioeconomic groups and find especially strong effects for migrant groups from former guestworker countries and new EU countries. Further, we are able to investigate a number of issues in order to deepen the insight on actual job referrals: distinguishing between the effects on working in the same neighborhood and working in the same establishment - probably the more accurate measure for job referrals - shows that the latter yield overall smaller effects. Further, we find that clusters in employment although having a significant positive effect play only a minor role for the magnitude of the referral effect. When we exclude short distance commuters, we find the same probabilities of working together, which reinforces our interpretation of this probability as a network effect." (Author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitsvermittlung, informelle Kommunikation, soziales Netzwerk - Auswirkungen, soziale Umwelt, Beschäftigungseffekte, Arbeitsort, Wohnort, Inländer, Einwanderer, ausländische Arbeitnehmer, Arbeitsplatzwahl, peer group, Integrierte Erwerbsbiografien, Rhein-Region, Ruhrgebiet, Nordrhein-Westfalen, Bundesrepublik Deutschland
    JEL: J20 R23
    Date: 2014–01–09
  15. By: Richard B. Freeman; Ina Ganguli; Raviv Murciano-Goroff
    Abstract: This paper examines international and domestic collaborations using data from an original survey of corresponding authors and Web of Science data of articles with a US coauthor in Nanoscience and Nanotechnology, Biotechnology and Applied Microbiology, and Particle and Field Physics. The data allows us to investigate the connections among coauthors and the views of corresponding authors about the collaboration. We have four main findings. First, we find that US collaborations have increased across US cities as well as across international borders, with the nature of collaborations across cities resembling that across countries. Second, face-to-face meetings are important in collaborations: most collaborators first met working in the same institution and communicate often through meetings coauthors from distant location. Third, the main reason for most collaborations are to combine the specialized knowledge and skills of coauthors, with however, substantial differences in the mode of collaborations between small lab-based science and big science, where international collaborations are more prevalent. Fourth, we find that citation rates are higher in international collaborations than in domestic collaborations in biotech but not in the other two fields. Moreover, in all three fields, papers with the same number of coauthors had lower citations if they were international collaborations. Overall, our findings suggest that all collaborations are best viewed from a framework of collaborations across space broadly, rather than in terms of international as opposed to domestic collaborative activity.
    JEL: J01 J2 J24 J4 J44 J61 J68 O31 O32 O33
    Date: 2014–01
  16. By: Constanza Martínez; Carlos León
    Abstract: Under the view that the market is a weighted and directed network (Barabási, 2003), this document is a first attempt to model the Colombian money market within a spatial econometrics framework. By estimating two standard spatial econometric models, we study the cost of collateralized borrowing (i.e. sell/buy backs) among Colombian financial institutions, and its relationship with the effects induced by traditional variables (leverage, size and borrowing levels), and by spatial variables resulting from observed linkages among financial institutions. The model that best fits the data is the Spatial Durbin Model, whose main findings indicate that (i) traditional variables are of low explanatory power by themselves; (ii) there exists a significant spatial dependence with regard to the cost of collateralized borrowing; (iii) the inclusion of spatial lags of the same traditional factors results in a model able to explain the existence of borrowing spreads that vary across financial institutions despite the collateralized nature of sell/buy backs; (iv) direct and spill-over effects from the spatially lagged value of financial leverage are the most significant for determining the cost of collateralized borrowing. Results are valuable since making connectedness an explanatory variable breaks with the traditional (reductionist) understanding of financial markets, which concurs with the current interest in the macro-prudential perspective of financial stability.
    Keywords: Money market, interbank, collateral, collateralized borrowing, spatial econometrics. Classification JEL: C31, G21, G32
    Date: 2014–01

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