nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒11‒28
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The determinants of spatial location of creative industries start-ups: Evidence from Portugal using a discrete choice model approach By Sara Cruz; Aurora A.C. Teixeira
  2. A spatial Solow model with transport cost By Juchem Neto, Joao Plinio; Claeyssen, Julio Cesar Ruiz; Porto Junior, Sabino da Silva
  3. Spatial frictions By Behrens, Kristian; Mion, Giordano; Murata, Yasusada; Suedekum, Jens
  4. Clusters of Organic Operations and their Impact on Regional Economic Growth in the United States By Marasteanu, I. Julia; Jaenicke, Edward C.
  5. Regional determinants of firm entry in a developing country By Calá, Carla Daniela; Manjón-Antolín, Miguel; Arauzo-Carod, Josep-Maria
  6. The Impact of Local Minimum Wages on Employment: Evidence from Italy in the 1950s By Guido de Blasio; Samuele Poy
  7. The Diffusion of Development: Along Genetic or Geographic Lines? By Douglas L. Campbell; Ju Hyun Pyun
  8. The Comparative Advantage of Cities By Donald R. Davis; Jonathan I. Dingel

  1. By: Sara Cruz (CEF.UP, Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC TEC; OBEGEF)
    Abstract: This paper assesses the location determinants of the newly created firms in the creative sector within the framework of Discrete Choice Models. Estimations using a conditional logit model, which incorporate spatial effects of neighbouring regions in the location choices of firms, yield the following results: i) the concentration of creative and knowledge-based activities, due to agglomeration economies, play an important role in location decisions of new creative establishments; ii) in contrast, the concentration of service-business activities has a negative impact on location choices, which may be due to the fact that creative firms privilege interdependencies with other activity sectors, such as innovation/ knowledge-based activities; iii) creative firms tend to favour a diversified industrial tissue and related variety, in order to enjoy from inter-sectorial synergies; iv) higher education at a regional level has a highly significant, positive effect on location decisions, while lower educational levels of human capital negatively affect those decisions, explained by the specific requirements that creative firms usually have of a highly skilled labour force; v) tolerant/ open environments attract creative activities; vi) creative firms tend to favour municipalities where the stock of knowledge and conditions for innovative activity are higher. Location decisions of creative firms also vary according to the creative sector they belong to and to their own characteristics, firm’s educational level or technology-intensity. Finally, municipality attributes are more important in terms of firms’ location decisions than the characteristics of nearby regions.
    Keywords: Spatial economics; industrial location; econometric models; creative industries.
    JEL: C01 R12 R30
    Date: 2014–10
  2. By: Juchem Neto, Joao Plinio; Claeyssen, Julio Cesar Ruiz; Porto Junior, Sabino da Silva
    Abstract: In this paper we introduce capital transport cost in an unidimensional unbounded economy described by a spatial Solow model with capital-induced labor migration. Proceeding with a linear stability analysis of its spatially homogeneous equilibrium solution, we show that exists a critical value for the capital transport cost where the dynamic behavior of the economy changes, provided the capital-induced labor migration intensity is big enough. On one hand, if capital transport cost is bigger than this critical value, the homogeneous equilibrium of the model is stable, and the economy converges to this spatially homogeneous state in the long run; on the other hand, if transport cost is smaller than this critical value, the equilibrium is unstable, and the economy may develop distinct spatio-temporal dynamics, including the formation of stable economic clusters and spatio-temporal economic cycles, depending on the other parameters of the model. This result, though obtained using a different formalism, is consistent with the main results of the standard core-periphery model used in the New Economic Geography literature, where a small transport cost is essencial to the formation of spatial economic agglomeration. Finally, we close this work validating the linear stability analysis results through numerical simulations, and verifying that the introduction of a positive transport cost in the model causes a break in the symmetry of the spatial economic agglomerations generated.
    Keywords: Spatial Solow Model, Regional Science, Economic Agglomeration, Economic Geography.
    JEL: O40 R12
    Date: 2014–11–06
  3. By: Behrens, Kristian; Mion, Giordano; Murata, Yasusada; Suedekum, Jens
    Abstract: The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We develop and quantify a novel framework to address this question at three different levels: Do spatial frictions matter for the city-size distribution? Do they affect individual city sizes? Do they contribute to the productivity advantage of large cities and the toughness of competition in cities? The short answers are: no; yes; and it depends.
    Keywords: trade frictions,urban frictions,city-size distribution,productivity,markups
    JEL: F12 R12
    Date: 2014
  4. By: Marasteanu, I. Julia; Jaenicke, Edward C.
    Abstract: The purpose of this paper is to examine the impact of clusters of certified organic operations on county-level general economic indicators in order to assess the potential of organic clustering as an economic development tool. We first identify clusters of organic operations using the Local Moran’s I test statistic, which tests the null hypothesis of no spatial autocorrelation, and data from the National Organic Program and the U.S. Census. We then use these spatially defined clusters, as well as county-level data from publicly available sources such as the U.S. Census, the Bureau of Labor Statistics, the USDA’s Census of Agriculture, and the USDA’s Agricultural Resource Management Survey (ARMS), to analyze the impact of clustering on county-level economic indicators. To do this, we use a treatment effects model in which the dependent variable is a county-level economic indicator and the treatment is being in a cluster of organic operations. For comparison, we also perform these analyses for general agricultural establishments.
    Keywords: Organic Agriculture, Regional Economic Development, Spatial Econometrics, Hotspots, Treatment Effects, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Q13, R11,
    Date: 2014
  5. By: Calá, Carla Daniela; Manjón-Antolín, Miguel; Arauzo-Carod, Josep-Maria
    Abstract: We analyse the determinants of firm entry in developing countries using Argentina as an illustrative case. Our main finding is that although most of the regional determinants used in previous studies analysing developed countries are also relevant here, there is a need for additional explanatory variables that proxy for the specificities of developing economies (e.g., poverty, informal economy and idle capacity). We also find evidence of a core-periphery pattern in the spatial structure of entry that seems to be mostly driven by differences in agglomeration economies. Since regional policies aiming to attract new firms are largely based on evidence from developed countries, our results raise doubts about the usefulness of such policies when applied to developing economies.
    Date: 2014
  6. By: Guido de Blasio (Bank of Italy); Samuele Poy (FBK-IRVAPP)
    Abstract: This paper measures the impact of wage zones - minimum wage differentials at the province level - on Italy's local labor markets during the 1950s. Using a spatial regression discontinuity design, it finds that for the industrial sectors covered under wage zones there was an increase in employment when one crossed the border from a high-wage province into a low-wage one; the effect diminished, however, as the distance from the boundary increased. The paper also illustrates that the impact on the overall (non-farm) private sector, which includes both covered and uncovered sectors, was basically zero. On balance, the scheme generated some reallocation of economic activity, albeit confined to areas close to the province border.
    Keywords: Minimum wages, Regional economic activity, Regression discontinuity
    JEL: C14 J38 R11
    Date: 2014–11
  7. By: Douglas L. Campbell (New Economic School (NES)); Ju Hyun Pyun (Korea University Business School)
    Abstract: Why are some societies still poor? Recent research suggests that a country’s “genetic distance”—a measure of the time elapsed since two populations had common ancestry—from the United States is a significant predictor of development even after controlling for an ostensibly exhaustive list of geographic, historical, religious and linguistic variables. We find, by contrast, that the correlation of genetic distance from the US and GDP per capita disappears with the addition of controls for geography, including distance from the equator and a dummy for sub-Saharan Africa.
    Keywords: Genetic Distance, Economic Development, Geography, Climatic Similarity, Technological Diffusion
    JEL: O10 O33 O49
    Date: 2014–11
  8. By: Donald R. Davis; Jonathan I. Dingel
    Abstract: What determines the distributions of skills, occupations, and industries across cities? We develop a theory to jointly address these fundamental questions about the spatial organization of economies. Our model incorporates a system of cities, their internal urban structures, and a high-dimensional theory of factor-driven comparative advantage. It predicts that larger cities will be skill-abundant and specialize in skill-intensive activities according to the monotone likelihood ratio property. We test the model using data on 270 US metropolitan areas, 3 to 9 educational categories, 22 occupations, and 21 manufacturing industries. The results provide support for our theory's predictions.
    JEL: F11 F14 R12 R13
    Date: 2014–10

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