nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒02‒02
27 papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. "Technological Progress and Economic Geography" By Takatoshi Tabuchi; Jacques-Fran�ois Thisse; Xiwei Zhu
  2. Spatial Sorting By Schmidheiny, Kurt; Eeckhout, Jan; Pinheiro, Roberto
  3. City Age and City Size By Südekum, Jens; Giesen, Kristian
  4. Local Transmission of Trade Shocks By Ferdinando Monte
  5. Race to the debt trap? Spatial econometric evidence on debt in German municipalities By Fossen, Frank M.; Freier, Ronny; Martin, Thorsten
  6. Regional Implications of Financial Market Development: Credit Rationing, Trade, and Location By Seidel, Tobias; von Ehrlich, Maximilian
  7. The Economics of Density: Evidence from the Berlin Wall By Sturm, Daniel; Ahlfeldt, Gabriel; Redding, Stephen; Wolf, Nikolaus
  8. Culture and the Spatial Dissemination of Ideas Evidence from Froebel s Kindergarten Movement By Falck, Oliver; Bauernschuster, Stefan
  9. Do eco-innovations need specific regional characteristics? By Horbach, Jens
  10. Beyond Rising Unemployment: Unemployment Risk, Crisis and Regional Adjustments in Greece By Vassilis Monastiriotis; Angelo Martelli
  11. Regional resilience and fat tails: A stochastic analysis of firm growth rate distributions of German regions By Matthias Duschl
  12. Minimum wages and employment: A spatial identification strategy for Germany By Frings, Hanna; vom Berge, Philipp; Paloyo, Alfredo R.
  13. Trade and Interdependence in a Spatially Complex World By Michal Fabinger
  14. Does distance matter? Tuition Fees and Enrollment of First-Year Students at German Public Universities By Fischer, Georg-Benedikt; Bruckmeier, Kerstin; Wigger, Berthold U.
  15. Macroeconomic Implications of Agglomeration By Toni Whited; Jonas Fisher; Morris Davis
  16. Industry Localization, Distance Decay, and Knowledge Spillovers: Following the Patent Paper Trail By Octávio Figueiredo; Paulo Guimarães; Douglas Woodward
  17. Spatial structures of health outcomes and health behaviours in Scotland: Evidence from the Scottish Health Survey By Arnab Bhattacharjee; Taps Maiti; Dennis Petrie
  18. Examining the Structure of Spatial Health Effects using Hierarchical Bayes Models By Eibich, Peter; Ziebarth, Nicolas
  19. History, Path Dependence and Development: Evidence from Colonial Railroads, Settlers and Cities in Kenya By Remi Jedwab; Edward Kerby; Alexander Moradi
  20. Coal and the European Industrial Revolution By Alan Fernihough; Kevin Hjorstshøj O’Rourke
  21. Regional fertility data analysis: A small area Bayesian approach By Eduardo A. Castro; Zhen Zhang; Arnab Bhattacharjee; José M. Martins; Taps Maiti
  22. Green cities? Urbanization, trade and the environment By Borck, Rainald; Pflüger, Michael
  23. Endogenous spatial structure and delineation of submarkets: A new framework with application to housing markets By Arnab Bhattacharjee; Eduardo Castro; Taps Maiti; João Marques
  24. The Magnitude and Causes of Job Polarization: A Local Labor Market Approach By Dauth, Wolfgang
  25. Location, location, location: Extracting location value from house prices By Kolbe, Jens; Schulz, Rainer; Wersing, Martin; Werwatz, Axel
  26. Functional regression over irregular domains By Arnab Bhattacharjee; Liqian Cai; Taps Maiti
  27. Growing at Your Neighbor’s Expense? A Spatial examination of growth in the Americas By Brian Piper

  1. By: Takatoshi Tabuchi (Faculty of Economics, The University of Tokyo); Jacques-Fran�ois Thisse (CORE, Universit� catholique de Louvain, NRU-Higher School of Economics and CEPR); Xiwei Zhu (Center for Research of Private Economy and School of Economics, Zhejiang University)
    Abstract:    New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive e¢ ciency when labor productivity rises.
    Date: 2014–01
  2. By: Schmidheiny, Kurt; Eeckhout, Jan; Pinheiro, Roberto
    Abstract: We investigate the role of complementarities in production and skill mobility across cities. We propose a general equilibrium model of location choice by heterogeneously skilled workers, and consider different degrees of complementarities between the skills of workers. The nature of the complementarities determines the equilibrium skill distribution across cities. We prove that with extreme-skill complementarity, the skill distribution has fatter tails in large cities; with top-skill complementarity, there is first-order stochastic dominance. Using the model to back out skills from wage and housing price data, we find robust evidence of fat tails in large cities. Big cities have big inequality. This pattern of spatial sorting is consistent with extreme-skill complementarity: the productivity of high skilled workers and of the providers of low skilled services is mutually enhanced. --
    JEL: R10 J61 J60
    Date: 2013
  3. By: Südekum, Jens; Giesen, Kristian
    Abstract: There has been vast interest in the distribution of city sizes in an economy, but this research has largely neglected that cities also diff er along another fundamental dimension: age. Using novel data on the foundation dates of almost 8,000 American cities, we fi nd that older cities in the US tend to be larger than younger ones. To take this nexus between city age and city size into account, we introduce endogenous city creation into a dynamic economic model of an urban system. The city size distribution that emerges in our economy delivers an excellent and robust fit to diff erent types of US city size data, in fact much better than other parameterizations derived from diff erent urban growth models. This evidence can resolve several recent debates, and build a bridge between different views in the literature on city size distributions. --
    JEL: R11 R12 R10
    Date: 2013
  4. By: Ferdinando Monte (Johns Hopkins University, Carey Business School)
    Abstract: This paper studies theoretically and empirically the geographic transmission of trade shocks over the territory of a country. Increases in labor demand in a location raise local wages and draw workers away from employment in neighboring locations: those locations experience a reduction in labor supply and an increase in prevailing wages even if not initially affected, or not engaged in the production of tradeable goods; adjustment in their wages affect in turn other close-by locations. In addition, increases in prevailing wages in a location affect all the industries producing there: other locations active in the same industries gain then market shares and experience an increase in labor demand even when they are far apart. I develop a model capable of incorporating realistic geographic features and isolate theoretically the different components of this diffusion. The model is general enough to also allow the study of transmission of localized immigration and productivity shocks. I estimate its main components with data on US commuting patterns and sectoral employment. I illustrate the impact of reductions in trade frictions in a sector on locations active and inactive in it, and the consequences of productivity growth on nominal wages of workers vs. real wages of residents. The model delivers insights on the consequences of ignoring commuting ?flows in analyses of local labor markets.
    Keywords: trade, commuting, local labor markets, geography
    JEL: F16 J61
    Date: 2014–01
  5. By: Fossen, Frank M.; Freier, Ronny; Martin, Thorsten
    Abstract: Through an intertemporal budget constraint, jurisdictions may gain advantages in tax and spending competition by 'competing' on debt. While the existing spatial econometric literature focuses on tax and spending competition, very little is known about spatial interaction via public debt. This paper estimates the spatial interdependence of public debt among German municipalities using a panel on municipalities in the two largest German states from 1999 to 2006. We find significant and robust interaction effects between debt of neighboring municipalities, which we compare to spatial tax and spending interactions. The results indicate that a municipality increases its per capita debt by 16-33 Euro as a reaction to an increase of 100 Euro in neighboring municipalities. --
    Keywords: public debt,tax and spending competition,municipality data,spatial interactions,spatial panel estimation
    JEL: C23 H63 H74 R12
    Date: 2014
  6. By: Seidel, Tobias; von Ehrlich, Maximilian
    Abstract: We develop a heterogeneous-fi rms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating fi nancial frictions reduces the incentive of high-skilled workers to migrate to one region such that an unequal distribution of industrial activity becomes less likely. Hence, financial market development has opposite regional implications as trade liberalization. While the former leads to more dispersion of economic activity across space, the latter tends to drive clustering. We provide empirical evidence for this hypothesis by combining industry-region variation in the spatial concentration of economic activity with information on the access to credit and the dependence on external finance. Our estimates for 20 European countries and eleven industries con firm that fi nancial market development mitigates the clustering of economic activity. --
    JEL: F12 F36 R11
    Date: 2013
  7. By: Sturm, Daniel; Ahlfeldt, Gabriel; Redding, Stephen; Wolf, Nikolaus
    Abstract: This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical analysis because of stochastic shocks to worker productivity, which yield a gravity equation for commuting ows. To empirically disentangle alternative determinants of location choices, we use Berlin s division and reuni cation as a source of exogenous variation in the surrounding concentration of economic activity. Using disaggregated data on land prices, workplace employment and residence employment for thousands of city blocks for 1936, 1986 and 2006, we nd that the model can account both qualitatively and quantitatively for the observed changes in city structure. --
    JEL: N34 O18 R12
    Date: 2013
  8. By: Falck, Oliver; Bauernschuster, Stefan
    Abstract: Friedrich Froebel, a German pedagogue, established the first kindergarten worldwide in Thuringia in 1839. We study the spatial dissemination of the kindergarten movement in Germany in the 19th and beginning of the 20th century. Spatial dissemination can be explained by the cultural proximity, measured by dialect similarity at the end of the 19th century, to Froebel s place of activity. We further show that the spatial pattern of child care use is highly persistent over time. End of 19th century cultural proximity to Froebel s place of activity can explain the spatial pattern of child care use in the 1990s and 2000s. --
    JEL: N33 J13 Z13
    Date: 2013
  9. By: Horbach, Jens
    Abstract: The theoretical and empirical innovation literature stresses the importance of regional fac-tors and locational conditions for location choice of firms and their innovation success. Innovation activities are not equally distributed in space because agglomeration effects and specific regional infrastructures may promote innovation success. Concerning environmentally oriented innovations, the so-called eco-innovations, there is a widespread empirical literature analyzing their determinants but - because of the lack of adequate data - the inclusion of regional and locational factors has been neglected. This paper tries to close this gap by using the establishment panel of the German Institute for Employment Research in Nuremberg combined with data at the regional level. To explore specific regional determinants of eco-innovations compared to other innovations including variables at the firm and the regional level, a two-level mixed effects logistic regression has been applied. Our econometric results show that external knowledge sources such as the regional proximity to research centers and universities are more important for eco-innovations compared to other innovations. Eco-innovations seem to be a chance for under-developed, disadvantaged regions because especially regions characterized by a high unemployment rate are more likely to adopt eco-innovations. Furthermore, eco-innovations need more effort concerning R&D inputs, further education measures within a firm and the qualifi-cation of the personnel. --
    JEL: Q55 R11 C25
    Date: 2013
  10. By: Vassilis Monastiriotis; Angelo Martelli
    Abstract: The remarkable rise in unemployment in Greece has in a way overshadowed the substantial differentiation, across regions, in terms of regional unemployment and labour market adjustment. This paper examines the geography of these dynamics using probit regressions of unemployment risk and decomposing the observed regional unemployment differentials into three components corresponding to differences in labour quality, matching efficiency and effective demand. We find that, underlying the general increase in unemployment is a wealth of unemployment dynamics and adjustment trajectories. The fall in effective demand has been largest in the main metropolitan regions and the north and north-western periphery. Adjustment has been strong in some areas (e.g., Athens) but, overall, adjustment processes (such as bumping-down and changes in the mix of workforce characteristics) have been weak. The crisis has nullified the improvements in labour market performance registered since the country’s entry into the Eurozone, hitting especially those regions that benefitted most from the latter. The spatial differentiation of adjustment intensities and demand pressures suggests a heightened role for regional policy in the post-crisis period, especially in relation to addressing problems of over-education and matching efficiency in the demand-depressed areas and of inter-regional adjustment mechanisms nationally.
    Date: 2013–12
  11. By: Matthias Duschl (Section Economic Geography and Location Research, Philipps-University, Marburg)
    Abstract: This paper breaks down the distributional analysis of firm growth rates to the domain of regions. Extreme growth events, i.e. fat tails, are conceptualized as an indicator of competitive regional environments which enable processes like structural adaptation or technological re-orientation. An understanding of the heterogeneous dynamics at the level of firms, the “turbulence underneath the big calm†(Dosi et al. 2012), provides a micro-funded empirical perspective on the evolutionary dimension of regional resilience. Therefore, the flexible Asymmetric Exponential Power (AEP) density is fitted to firm data for each German region during the years of economic downturn (2008-2010). Peculiarities of employment growth are explicitly taken into account by applying a new maximum likelihood estimation procedure with order statistics (Bottazzi 2012). The estimated parameters, which measure the tails’ fatness, are then related to various region-specific factors that are discussed in the literature on regional resilience. Results show that firm growth rate distributions remain asymmetric and fat tailed at the spatially disaggregated level, but their shape markedly differ across regions. Extreme growth events, i.e. firm-level turbulences, are primarily a phenomenon of economically better performing regions at the aggregate level and further intensified by the presence of a higher qualified workforce. Besides, the fatness of the tails depends on the regions’ industrial structure.
    Keywords: regional resilience, firm growth, growth rates distributions, fat tails, asymmetric exponential power, evolutionary perspective
    JEL: R11 L16 C46
    Date: 2014–01–29
  12. By: Frings, Hanna; vom Berge, Philipp; Paloyo, Alfredo R.
    Abstract: We estimate the effects on wage and employment growth rates of the introduction and subsequent increases of the minimum wage in the main construction industry of Germany. Using a regional dataset constructed from individual employment histories, we exploit the spatial dimension and border discontinuities of the regional data to account for spillovers between districts and unobserved heterogeneity at the local level. The results indicate that the minimum wage increased the wage growth rate for East Germany but did not have a significant impact on the West German equivalent. The estimated effect on the employment growth rate revealed a contraction in the East of about 2.6 to 3.1 percentage points for a one-standard-deviation increase in the minimum-wage bite, amounting to roughly half of the overall decline in the growth rate, but no significant change was observed for the West. --
    JEL: J31 J38 J08
    Date: 2013
  13. By: Michal Fabinger (Pennsylvania State University)
    Abstract: This paper presents an analytic solution framework applicable to a wide variety of general equilibrium international trade models, including those of Krugman (1980), Eaton and Kortum (2002), Anderson and van Wincoop (2003), and Melitz (2003), in multi-location cases. For asymptotically power-law trade costs and in the large-space limit, it is shown that there are parameter thresholds where the qualitative behavior of the model economy changes. In the case of the Krugman (1980) model, the relevant parameter is closely related to the elasticity of substitution between different varieties of goods. The geographic reach of economic shocks changes fundamentally when the elasticity crosses a critical threshold: below this point shocks are felt even at long distances, while above it they remain local. The value of the threshold depends on the approximate dimensionality of the spatial configuration. This paper bridges the gap between empirical work on international and intranational trade, which frequently uses data sets involving large numbers of locations, and the theoretical literature, which has analytically examined solutions to the relevant models with realistic trade costs only for the case of very few locations.
    Date: 2013
  14. By: Fischer, Georg-Benedikt; Bruckmeier, Kerstin; Wigger, Berthold U.
    Abstract: We use the recent introduction of tuition fees at public universities in seven of the sixteen German states to identify the effects of tuition fees on university enrollment of first-year students at German public universities. Our study differs from previous research in two important ways. Firstly, we take into account the location of universities and include a spatial variable, which measures the distance between a fee-imposing university and the nearest fee-free alternative. Secondly, we use panel data that allows us to control for unobserved heterogeneity between universities. Our results suggest that enrollment at universities that impose a tuition fee and that are located close to fee-free universities experience a decrease in enrollment that is twice as large as the decrease at universities that are further away from fee-free universities. We also find gender differences in enrollment behavior. Enrollment numbers of female students at universities that are located far away from fee-free alternatives are significantly less affected by the introduction of tuition fees than are enrollment numbers of male students. --
    JEL: H75 I22 I23
    Date: 2013
  15. By: Toni Whited (University of Rochester); Jonas Fisher (Federal Reserve Bank of Chicago); Morris Davis (University of Wisconsin-Madison, School)
    Abstract: Cities exist because of the productivity gains arising from clustering production and workers, a process called agglomeration. How important is agglomeration for aggregate growth? This paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of local agglomeration on aggregate growth. We combine aggregate time series and city-level panel data to estimate our model’s parameters by the Generalized Method of Moments. The estimates imply that local agglomeration has an economically and statistically significant impact on the growth rate of per capita consumption, raising it by about 10 percent.
    Date: 2013
  16. By: Octávio Figueiredo (Universidade do Porto); Paulo Guimarães (American University of Sharjah); Douglas Woodward (University of South Carolina)
    Abstract: This paper investigates the hypothesis that knowledge spillovers increase where industries are localized. At the same time, we take a fresh look at the role of distance in knowledge diffusion. Our unique database combines U.S. county-level patent citation data with county-level establishment and employment data. Relying on a cited-citing gravity equation with high-dimensional fixed effects that control for multiple sources of observed and non-observed heterogeneity, we implement a Poisson pseudo-maximum-likelihood estimator. Our results confirm the negative role of distance uncovered in Jaffe, Trajtenberg & Henderson's (1993) pioneering work. We also find that knowledge spillovers correlate positively with industry localization and that the agglomeration of an industry can offset the effect of distance. Our approach to estimate the Poisson regression with two high-dimensional fixed effects may prove equally useful in applications to a variety of other problems in economics.
    Keywords: Knowledge Spillovers, Agglomeration, Gravity Equation, High-Dimensional Fixed Effects, Poisson Regression.
    JEL: R12 R39 C13 C21
    Date: 2014–01
  17. By: Arnab Bhattacharjee (Heriot-Watt University); Taps Maiti (Michigan State University); Dennis Petrie (University of Melbourne)
    Abstract: Socioeconomic characteristics, health behaviours, and the utilisation and quality of healthcare are prime examples of socioeconomic, cultural and demographic phenomena that are inherently spatial in nature. Understanding the spatial structure of these factors is particularly relevant in order to efficiently allocate resources. This paper explores the general equilibrium spatial structure of health outcomes and health behaviours across Scottish health boards using a variant of the spatial Durbin model which allows for an a priori unknown spatial weights matrix. The results suggest that there is substantial spatial dynamics in behaviours across Health Boards and that these spillovers are, as expected, asymmetric. We then demonstrate how the model can be used to estimate the behavioural and health impact of a targeted education policy within each health board taking into account both the direct effect on the particular health board itself and the indirect effect in terms of spillovers. The results illustrate how the dynamic effects play a large role in designing place based policies that maximise the overall effectiveness of health interventions. Taking into account the spatial dynamics allows policy makers to better target resources and interventions on particular clusters where the direct and indirect spillover benefits are likely to be the greatest in terms of improving health.
    Keywords: spatial econometrics, spatial weights matrix, spatial Durbin model, health outcomes, health behaviours, health care utilisation
    JEL: I12 I18 C33
    Date: 2014
  18. By: Eibich, Peter; Ziebarth, Nicolas
    Abstract: This paper makes use of Hierarchical Bayes Models to model and estimate spatial health effects. We focus on Germany, combining rich individual-level household panel data with administrative county level information to estimate spatial county-level health dependencies. As dependent variable, we use the generic, continuous, and quasi-objective SF12 health measure. Our findings reveal strong and highly significant spatial dependencies and clusters. The strong and systematic county-level impact is comparable to an age effect on health of up to 31 years. Even 20 years after the peaceful German reunification, we detect a clear spatial East-West health pattern that equals an age impact on health of up to 9 life years. --
    JEL: C11 C21 I18
    Date: 2013
  19. By: Remi Jedwab; Edward Kerby; Alexander Moradi
    Abstract: Little is known about the extent and forces of urban path dependence in developing countries. Railroad construction in colonial Kenya provides a natural experiment to study the emergence and persistence of this spatial equilibrium. Using new data at a fine spatial level over one century shows that colonial railroads causally determined the location of European settlers, which in turn decided the location of the main cities of the country at independence. Railroads declined and settlers left after independence, yet cities persisted. Their early emergence served as a mechanism to coordinate investments in the post-independence period, yielding evidence for how path dependence influences development.
    Keywords: Path Dependence; Urbanisation; Transportation; Colonialism
    JEL: R11 R12 R40 O18 O33 N97
    Date: 2014
  20. By: Alan Fernihough (Institute for International Integration Studies, Trinity College, Ireland); Kevin Hjorstshøj O’Rourke (All Souls College, Oxford, UK)
    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 exhibits 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.
    Keywords: Coal, Historical Population, Geography
    JEL: N13 N53 O13 O14 J10
    Date: 2014–01–22
  21. By: Eduardo A. Castro (Department of Social, Political and Territorial Sciences, University of Aveiro); Zhen Zhang (Department of Statistics and Probability, Michigan State University); Arnab Bhattacharjee (Department of Economics and Spatial Economics and Econometrics Centre (SEEC), Heriot-Watt University); José M. Martins (Department of Social, Political and Territorial Sciences, University of Aveiro); Taps Maiti
    Abstract: Accurate estimation of demographic variables such as mortality, fertility and migrations, by age groups and regions, is important for analyses and policy. However, traditional estimates based on within cohort counts are often inaccurate, particularly when the sub-populations considered are small. We use small area Bayesian statistics to develop a model for age-specific fertility rates. In turn, such small area estimation requires accurate descriptions of spatial and cross-section dependence. The proposed methodology uses spatial clustering methods to estimate an adjacency matrix that captures such dependence more adequately. The model is then used to estimate agespecific fertility rates and total fertility rates at the regional NUTS III area level for Portugal. The paper makes important contributions to small area Bayesian statistics in a spatial domain focusing on estimation of fertility rates. The estimates obtained are more accurate and adequately represent uncertainty in the estimates, and are therefore very useful for demographic policy in Portugal.
    Date: 2013
  22. By: Borck, Rainald; Pflüger, Michael
    Abstract: We study environmental pollution in an economic geography framework with two cities, where pollution arises from commuting within cities, goods transport between cities, production of manufacturing and agricultural goods, and residential energy use. We find that city size has an ambiguous effect on pollution levels. We also analyse how pollution changes with varying trade freeness, skilled wage income, and commuting costs. --
    JEL: Q54 R12 F12
    Date: 2013
  23. By: Arnab Bhattacharjee (Heriot-Watt University); Eduardo Castro (University of Aveiro); Taps Maiti (Michigan State University); João Marques (University of Aveiro)
    Abstract: Definition of housing submarkets is important at both conceptual and empirical levels. In the housing studies literature, submarkets have been defined according to three different criteria: i) similarity in hedonic housing characters, ii) similarity in hedonic prices; iii) substitutability of housing units. We argue that the simultaneous fulfilment of criteria i) and ii) is a sufficient condition for criteria iii) to be fulfilled. Criterion i) is directly observable, while criterion ii) can be checked by a model able to detect and analyse spatial heterogeneity in the shadow prices. Here, we propose a new framework, based on a synthesis of spatial econometrics, functional data analysis (FDA) and geographically weighted regression (GWR). The framework is applied to a hedonic regression model where the dependent variable is logarithm of house prices per square meter and housing features are regressors. Thus, we delineate submarkets by clustering (jointly) on the surfaces of the estimated functional partial effects and housing features. The above model addresses two main limitations of previous approaches. First, endogeneity in spatial structure can be incorporated in the model. Second, the framework does not require delineation of housing submarkets a priori. Application to the housing market of the Aveiro-Ãlhavo urban conglomeration in Portugal implies submarkets that emphasize the historical and endogenous evolution of the urban spatial structure.
    Keywords: Spatial heterogeneity, Submarkets, Spatial lag model, Geographically weighted regression, Functional data analysis
    JEL: C21 R31 C51
    Date: 2014
  24. By: Dauth, Wolfgang
    Abstract: This paper examines job polarization at the level of local labor markets in Germany over a 30-year period. The major explanation of job polarization is skill biased technological change (SBTC): new technologies are complementary to high paying jobs but substitute workers in routine manual jobs in the middle of the wage distribution, who relocate to low paying service jobs. Several recent papers use regional data to analyze if there is a relation between routine labor and the growth of service jobs, but provide no evidence if the region's labor markets are actually polarized. I close this gap by first introducing an intuitive and simple index to measure the magnitude of job polarization. Then I use comprehensive data on all German employees subject to social security to calculate this index for 204 local labor markets (LLM) in Western Germany between 1980 and 2010. I find that there are substantial disparities if and how strongly LLM are polarized. About one half of all German LLM exhibit significant job polarization, while some others are even inversely polarized. In an econometric analysis, I use this measure to examine the relation between the regional economic structure in the beginning of the period and job polarization. The main finding is that the explanation of SBTC does not apply to all regions to the same extend. Urban regions with many export oriented manufacturing industries in 1980 are most likely to polarize, while SBTC does not seem to have led to polarization in rural regions specialized in traditional manufacturing. --
    JEL: J31 J24 R23
    Date: 2013
  25. By: Kolbe, Jens; Schulz, Rainer; Wersing, Martin; Werwatz, Axel
    Abstract: We propose a novel semiparametric method to extract location values from house prices. After splitting house prices into building and land components, location values are estimated with adaptive weight smoothing. The adaptive estimator requires neither strong smoothness assumptions nor local symmetry. We apply the method to house transactions from Berlin, Germany. The estimated surface of location values is highly correlated with expert-based land values and location ratings. The method can therefore be used for applications where no other location value information exists or where this information is not reliable. --
    JEL: C14 R31 C50
    Date: 2013
  26. By: Arnab Bhattacharjee (Heriot-Watt University); Liqian Cai (Michigan State University); Taps Maiti (Michigan State University)
    Abstract: We develop a method for estimating the functional surface of a regression coefficient that varies over a complex spatial domain with irregular boundaries, peninsulas and interior holes. The method is motivated by, and applied to, data on housing markets, where the central object of inference is estimation of spatially varying effects of living space on house prices. For this purpose, we extend a method of spline smoothing over an irregular domain to the functional regression model. Spatially varying coefficients for a specific regressor are estimated by a combination of three smoothing problems, allowing for additional regressors with spatially fixed coefficients. The estimates adapt well to the irregular and complex spatial domain. Implicit prices for living space vary spatially, being high in the city centre and other desirable locations, and declining towards the periphery along gradients determined by major roads.
    Keywords: Delaunay triangulation, Finite element, Housing markets, Spatial functional regression, Spline smoothing
    Date: 2013
  27. By: Brian Piper (Department of Economics and International Business, Sam Houston State University)
    Date: 2014–01

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