nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒05‒09
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Agglomeration Economies, Taxable Rents, And Government Capture: Evidence From A Place-Based Policy By Brülhart, Marius; Simpson, Helen
  2. The persistent effects of place-based policy: Evidence from the West-German Zonenrandgebiet By Maximilian von Ehrlich; Tobias Seidel
  3. Entry into working life: Spatial mobility and the job match quality of higher-educated graduates By Venhorst V.; Cörvers F.
  4. Good Firms, Worker Flows and Local Productivity By Michel Serafinelli
  5. US city size distribution revisited: Theory and empirical evidence By Ramos, Arturo; Sanz-Gracia, Fernando
  6. Does Related variety matter for Creative Industries? By Luciana Lazzeretti; Niccolò Innocenti; Francesco Capone
  7. The Effects of Regional R&D Subsidies on Innovative SME: Evidence from Aquitaine SMEs By BEDU Nicolas; VANDERSTOCKEN Alexis
  8. Urbanization without Growth in Historical Perspective By Remi Jedwab; Dietrich Vollrath
  9. The Impact of Trade on Labor Market Dynamics By Caliendo, Lorenzo; Dvorkin , Maximiliano; Parro, Fernando
  10. Which factors influence the international mobility of research scientists? By Silvia Appelt; Brigitte van Beuzekom; Fernando Galindo-Rueda; Roberto de Pinho

  1. By: Brülhart, Marius; Simpson, Helen
    Abstract: We study how industry-level agglomeration economies affect government policy. Using administrative data on firm subsidies in economically lagging regions of Great Britain, we test two alternative hypotheses. Economic geography models imply that firms at an industry’s core can sustain higher tax burdens or require lower subsidies than firms in more remote locations. Conversely, political economy models predict firms at the industry’s core to be more successful at lobbying government, particularly at the sub-national level, thus obtaining more favourable fiscal treatment. We find that local government agencies structure subsidy offers to favour pre-existing employment in locally agglomerated industries, behaviour more in line with theories of policy capture than with economic geography models.
    Keywords: agglomeration; policy capture; regional grants; taxation
    JEL: H25 H32 R12
    Date: 2015–05
  2. By: Maximilian von Ehrlich; Tobias Seidel
    Abstract: Using a natural experiment from Germany, we show that temporary place-based subsidies generate persistent effects on economic density. We identify employment and capital formation as main channels for higher income per square kilometer. As the spatial regression discontinuity design allows us to control for all spatially-continuous determinants of agglomeration (e.g. home-market effects, knowledge spillovers), we attribute an important role to capital formation in explaining persistent spatial patterns of economic activity. However, estimates of externalities at the treatment border point to small net effects of the policy. We find strong evidence that pre-treatment land owners have benefitted substantially from the program and transfers show larger effects in high-density places. Finally, accounting for regional subsidies raises the causal effect of market access for economic development as identified in Redding and Sturm (2008) by about 45 percent.
    Keywords: Place-based policy; Regional policy; Economic geography; Persistence; Regression discontinuity; Locational advantage; Land value capitalization
    JEL: H25 H41 H54 O15 O18 R12
    Date: 2015–04
  3. By: Venhorst V.; Cörvers F. (GSBE)
    Abstract: We estimate the impact of spatial mobility on job match quality by using a data set of recent Dutch university and college graduates We find positive wage returns related to spatial mobility. However, after controlling for the self-selection of migrants with an IV approach, this effect is no longer significant. We also find that, for our alternative job-match measures, where there is evidence of migrant self-selection, controlling for self-selection strongly reduces the effect of spatial mobility on job match quality. In some cases, the returns on spatial mobility are found to be negative, which may signal forced spatial mobility.
    Keywords: Analysis of Education; Human Capital; Skills; Occupational Choice; Labor Productivity; Wage Level and Structure; Wage Differentials; Geographic Labor Mobility; Immigrant Workers; Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics;
    JEL: I21 J24 J31 J61 R23
    Date: 2015
  4. By: Michel Serafinelli
    Abstract: A clear consensus has emerged that agglomeration economies are an important factor explaining why firms cluster next to each other. Yet, because of non-trivial measurement challenges, disagreement remains over the sources of these agglomeration effects. This paper is the first to present direct evidence showing how localized knowledge spillovers arise from workers changing jobs within the same local labor market. Specifically, I assess the extent to which firm-to-firm labor mobility enhances the productivity of firms located near highly productive firms. Using a unique dataset combining Social Security earnings records and balance sheet information for Veneto, a region in Italy with many successful industrial clusters, I first identify a set of highly productive firms, then show that hiring workers with experience at these firms significantly increases the productivity of other firms. To address identification threats arising from both contemporaneous and future unobservable firm-level productivity shocks correlated with hiring, I use control function methods drawn from the productivity literature and a novel instrumental variable strategy, which exploits downsizing events at highly productive firms. My findings imply that worker flows can explain around 10 percent of the productivity gains experienced by incumbent firms when new highly productive firms are added to a local labor market.
    Keywords: productivity, agglomeration economies, local knowledge spillovers, linked employer-employee data, labor mobility, instrumental variable.
    JEL: R10 D24 J31 J60
    Date: 2015–04–29
  5. By: Ramos, Arturo; Sanz-Gracia, Fernando
    Abstract: We develop a urban economic model in which agents locate in cities of different size so as to maximize the net output of the whole system of cities in a country. From this model two new city size distributions are exactly derived. We call these functions “threshold double Pareto Generalized Beta of the second kind” and “double mixture Pareto Generalized Beta of the second kind”. In order to test empirically the theory, we analyze the US urban system and consider three types of data (incorporated places from 1900 to 2000, all places in 2000 and 2010 and City Cluster Algorithm nuclei in 1991 and 2000). The results are encouraging because the new distributions clearly outperform the lognormal and the double Pareto lognormal for all data samples. We consider a number of different tests and statistical criteria and the results are robust to all of them. Thus, the new distributions describe accurately the US city size distribution and, therefore, support the validity of the theoretical model.
    Keywords: human capital; congestion costs; lower tail, body, and upper tail; Pareto and Generalized Beta of the second kind distributions
    JEL: C46 D39 R11 R12
    Date: 2015–04–30
  6. By: Luciana Lazzeretti; Niccolò Innocenti; Francesco Capone
    Abstract: Creative industries have become a priority sector for economic development and to exit from the actual economic crisis. Nevertheless, creative industries includes heterogeneous industries and it is not enough investigated how variety and diversity work to favour knowledge spillovers and cross-fertilization processes. The Related Variety approach aims to identify key factors of economic growth considering the need for a local system to have a certain degree of cognitive proximity, so as to promote innovation and development in the area. This work contributes to both these strands of research and it attempts to investigate the role and importance of related and unrelated variety within creative industries for local economic growth. The study focuses on employment growth at provincial level during a long run period 1991-2011 in Italy. Results suggests that the employment growth in creative industries depends on their variety and, even more, on their related variety, which make them able to promote interactions among industries and foster creativity.
    Keywords: Creative industries, creativity, related variety, growth
    JEL: R11 O10
    Date: 2015–05
  7. By: BEDU Nicolas; VANDERSTOCKEN Alexis
    Abstract: Many studies have looked at the effectiveness of public schemes supporting private R&D but few have highlighted the role regions play in R&D funding. The present article assesses the R&D support package developed in the Aquitaine, France’s number one region in terms of proportion of budget spent on innovation. Its findings show that regional subsidies have induced local SMEs to increase their R&D resources and accelerate their expansion. More broadly, the article enhances understanding of the determinants explaining the effectiveness of public actions supporting private R&D.
    Keywords: SME, R&D subsidies, regional Science and Technology policy, public policy evaluation.
    JEL: H71 O3 R11 R58
    Date: 2015
  8. By: Remi Jedwab (Department of Economics/Institute for International Economic Policy, George Washington University); Dietrich Vollrath
    Abstract: The world is becoming more and more urbanized at every income level, and there has been a dramatic increase in the number of mega-cities in the developing world. This has led scholars to believe that development and urbanization are not always correlated, either across space or over time. In this paper, we use historical data at both the country level and city level over the five centuries between 1500-2010 to revisit the topic of “urbanization without growth†(Fay & Opal, 2000). In particular, we first establish that, although urbanization and income remain highly correlated within any given year, urbanization is 25-30 percentage points higher in 2010 than in 1500 at every level of income per capita. Second, while historically this shift in urbanization rates was more noticeable at the upper tail of the income distribution, i.e. for richer countries, it is now particularly visible at the lower tail, i.e. for poorer countries. Third, these patterns suggest that different factors may have explained the shift in different periods of time. We use the discussion of these factors as an opportunity to provide a survey of the literature and summarize our knowledge of what drives the urbanization process over time.
    Keywords: Urbanization without Growth, Economic Development, Megacities, Urban Poverty, Urbanization
    JEL: N9 R1 O1
  9. By: Caliendo, Lorenzo (Yale University and NBER); Dvorkin , Maximiliano (Federal Reserve Bank of St. Louis); Parro, Fernando (Federal Reserve Board.)
    Abstract: We develop a dynamic labor search model where production and consumption take place in spatially distinct labor markets with varying exposure to domestic and international trade. The model recognizes the role of labor mobility frictions, goods mobility frictions, geographic factors, and input-output linkages in determining equilibrium allocations. We show how to solve the equilibrium of the model without estimating productivities, reallocation frictions, or trade frictions, which are usually di¢ cult to identify. We use the model to study the dynamic labor market outcomes of aggregate trade shocks. We calibrate the model to 38 countries, 50 U.S. states and 22 sectors and use the rise in China’s import competition to quantify the aggregate and disaggregate employment and welfare effects on the U.S. economy. We find that China’s import competition growth resulted in 0.6 percentage point reduction in the share of manufacturing employment, approximately 1 million jobs lost, or about 60% of the change in the manufacturing employment share not explained by a secular trend. Overall, China’s shock increases U.S. welfare by 6.7% in the long-run and by 0.2% in the short-run with very heterogeneous effects across labor markets.
    Keywords: Migration; labor reallocation; dynamic discrete choice; manufacturing employment; intersectoral trade; interregional trade; international trade
    JEL: E24 F16 J62 R13 R23
    Date: 2015–05–01
  10. By: Silvia Appelt; Brigitte van Beuzekom; Fernando Galindo-Rueda; Roberto de Pinho
    Abstract: This paper investigates the factors that influence the international mobility of research scientists using a new measure of mobility derived from changes in affiliations reported by publishing scientists in a major global index of scholarly publications over the period 1996-2011. Using a gravity-based empirical framework, our research shows that measures of geographic and socioeconomic and scientific distance correlate negatively with scientist mobility between two countries. Scientific collaboration appears to be a major factor associated with the mobility of scientists. The analysis shows that the mobility of scientists particularly relies on flows of tertiary-level students in the opposite direction, from destination to origin country. This provides strong evidence that brain circulation is a complex and multi-directional phenomenon. For a majority of country pairs (dyads) in our sample, the mobility of scientists is generally better described by commensurate knowledge flows in both directions, rather than one dominating the other. The analysis also shows that mobility can be positively influenced by convergence in economic conditions and resources dedicated to R&D, as well as reduced visa-related restrictions.
    Date: 2015–04–27

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