nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒01‒26
six papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets By Artz, Georgeanne M.; Kim, Younjun; Orazem, Peter
  2. Identification of regions with less developed research and innovation systems By Trippl, Michaela; Asheim, Björn; Miorner, Johan
  3. Spatial Discontinuity for the Impact Assessment of the EU Regional Policy. The Case of Italian Objective 1 Regions By Mara Giua
  4. Optimal Spatial Taxation: Are Big Cities too Small? By Jan Eeckhout; Nezih Guner
  5. “Malthus living in a slum: urban concentration, infrastructures and economic growth” By David Castells
  6. Geographical Spread of Global Emissions: Within-country Inequalities Are Increasing By Caspar Sauter; Jean-Marie Grether; Nicole A. Mathys

  1. By: Artz, Georgeanne M.; Kim, Younjun; Orazem, Peter
    Abstract: We test whether commonly used measures of agglomeration economies encourage new firm entry in both urban and rural markets.  Using new firm location decisions in Iowa and North Carolina, we find that measured agglomeration economies increase the probability of new firm entry in both urban and rural areas.  Firms are more likely to locate in markets with an existing cluster of firms in the same industry, with greater concentrations of upstream suppliers or downstream customers, and with a larger proportion of college-educated workers in the local labor supply.  Firms are less likely to enter markets with no incumbent firms in the sector or where production is concentrated in relatively few sectors.  The same factors encourage both stand-alone start-ups and establishments built by multi-plant firms.  Commuting decisions exhibit the same pattern as new firm entry with workers commuting from low to high agglomeration markets.  Because agglomeration economies are important for rural firm entry also, policies encouraging new firm entry should focus on relatively few job centers rather than encouraging new firm entry in every small town.
    Keywords: firm entry; education; specialization; local monopoly; industrial diversity; upstream and downstream firms; stand-alone versus expansion start-ups
    JEL: L26 M13 R11
    Date: 2014–07–05
  2. By: Trippl, Michaela (CIRCLE, Lund University); Asheim, Björn (CIRCLE, Lund University); Miorner, Johan (CIRCLE, Lund University)
    Abstract: The aim of this working paper is to contribute to the debate on how to identify regions with less developed research and innovation systems. We look at both conceptual and empirical approaches that figure prominently in scholarly work on regional innovation systems. Based on a critical review and discussion of the literature we shed light on a large number and variety of barriers and weaknesses that may hamper regional innovation and industrial change. It is shown in this paper that the regional innovation system concept can essentially inform the current debate on the design and implementation of smart specialisation strategies. It offers rich insights into various dimensions of regional innovation systems that may be weakly developed and allows for the development of typologies that capture the heterogeneity of these systems. We also demonstrate that empirical approaches to identify regions with less-developed research and innovation systems fall short of taking account of the conceptual advances made in the recent past.
    Keywords: Regional innovation systems; innovation barriers; regional industrial change; smart specialisation strategies
    JEL: O30 O31 O38 R10 R11 R50
    Date: 2015–01–02
  3. By: Mara Giua
    Abstract: The capacity of the Regional Policy of the European Union (EU) to reduce the gap between the core and the periphery of the Union is still controversial. This paper revisits the question by exploiting treatment effect methods with a spatial approach never previ ously applied to the analysis of this policy. The spatial discontinuity represented by the administrative boundaries between‘Objective 1’ and ‘non-Objective 1’ regions makes it possible to estimate the causal impact of the EU Regional Policy on Italian ‘Objective 1’ regions where the EU has addressed a large amount of resources over the past decades. By focusing on the sub-sample of municipalities contiguous to the ‘policy-change boundary ’and by matching them according to the segment of the boundary of which they belong, the ‘Spatial RDD' model shows that the EU Regional Policy produced a positive impact on employment levels. The positive impact is concentrated in a specific set of economic sectors directly relevant to the policy action. In addition, there is no evidence of any displacement of resources away from other non-treated regions.
    Keywords: Regional Policy of the European Union, treatment effect methods, policy evaluation, regions, European Union, RDD
    Date: 2014–12
  4. By: Jan Eeckhout; Nezih Guner
    Abstract: We analyze the role of optimal income taxation across different local labor markets. Should labor in large cities be taxed differently than in small cities? We find that a planner who needs to raise revenue and is constrained by free mobility of labor across cities does not choose equal taxes for cities of different sizes. The optimal tax schedule is location specific and tax differences between large and small cities depends on the level of government spending and on the concentration of housing wealth. Our estimates for the US implies higher marginal rates in big cities, but lower than what is observed. Simulating the US economy under the optimal tax schedule, there are large effects on population mobility: the fraction of population in the 5 largest cities grows by 8.0% with 3.5% of the country-wide population moving to bigger cities. The welfare gains however are smaller. Aggregate consumption goes up by 1.53%. This is due to the fact that much of the output gains are spent on the increased costs of housing construction in bigger cities. Aggregate housing consumption goes down by 1.75%.
    Keywords: misallocation, taxation, population mobility, city size, general equilibrium
    JEL: H21 J61 R12 R13
    Date: 2014–12
  5. By: David Castells (Department of Econometrics. University of Barcelona)
    Abstract: The link between urban concentration and economic growth at country level is not straightforward, as there are benefits as well as costs associated with urban concentration. Indeed, recent empirical evidence suggests different effects of urban concentration on growth depending on the level of development and the world region under analysis. This paper revisits the literature on urban concentration and economic growth to shed some light on these previous results. In particular, differences in the process of urbanisation, and in the quality of the urban environment itself, have been suggested as most likely defining the balance between benefits and costs from urban concentration, and are probably behind differences in the relationship between concentration and growth. However, empirical evidence in this regard remains very limited. The aim of the paper is to fill this gap by paying special and explicit attention to differences between world regions in terms of urban infrastructure, essentially access to basic urban services. The main contribution of the paper is to therefore provide empirical evidence on the role that the urban environment plays in the relationship between urban concentration and economic growth.
    Keywords: Agglomeration, urbanisation, urban concentration, infrastructure, congestion diseconomies, growth, Sub-Sahara Africa JEL classification: O1, O4, R1
    Date: 2015–01
  6. By: Caspar Sauter (Institute of economic research IRENE, Faculty of Economics and Business, University of Neuchâtel, Switzerland); Jean-Marie Grether (Institute of economic research IRENE, Faculty of Economics and Business, University of Neuchâtel, Switzerland); Nicole A. Mathys (Federal Office for Spatial Development, Bern, Switzerland and Institute of economic research IRENE, Faculty of Economics and Business, University of Neuchâtel, Switzerland)
    Abstract: The major greenhouse gases, CO2 and CH4, are uniformly mixing, but spatial inequalities in emissions do matter in terms of both efficiency and equity of environmental policy formation and implementation. As the recent evidence has mainly focused on convergence issues between countries, this paper extends the empirical analysis by taking into account within-country inequalities in emissions of three major atmospheric pollutants: CO2, SO2 and CH4 over the 1970-2008 period. Using Theil-index decompositions, we show that within-country inequalities account for the bulk of global inequality, and tend to increase over the sample period, in contrast with diminishing between-country inequalities. An original extension to include differences across sectors reveals that between-sector inequality matters more than between-country inequality, and becomes the dominant source of global inequality at the end of the sample period in the CO2 and SO2 cases. A final exercise suggests that social tensions arising from the disconnection between emissions and future damages are easing for CO2 but rather stable for CH4. These orders of magnitude should be kept in mind while discussing the efficiency and fairness of alternative paths in combating global warming.
    Keywords: Global spatial emission inequality, sub-national emission inequality, CO2, SO2, CH4
    JEL: O13 D63 Q53 Q54 Q58
    Date: 2015–01

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