nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒06‒27
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Industrial agglomeration and spatial persistence of employment in software publishing By George Deltas; Dakshina De Silva; Robert P. McComb
  2. Cluster Policy: Renewal through the integration of institutional variety By Grillitsch, Markus; Asheim, Björn
  3. Entrepreneurial Regions: do macro-psychological Cultural Characteristics of Regions help solve the “Knowledge Paradox” of Economics? By Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
  4. Trade, Migration and Productivity: A Quantitative Analysis of China By Trevor Tombe; Xiaodong Zhu
  5. Regional Housing Supply Elasticity in Spatial Equilibrium Growth Analysis By Rickman, Dan S.; Wang, Hongbo
  6. Where Do We Go From Here? Market Access and Regional Development in Italy (1871-1911) By Anna Missiaia
  7. Accompanying evaluation of the funding instrument "Spitzencluster-Wettbewerb" (Leading-Edge Cluster Competition) of the federal ministry of education and research. Final report - Summary By Rothgang, Michael; Cantner, Uwe; Dehio, Jochen; Engel, Dirk; Fertig, Michael; Graf, Holger; Hinzmann, Susanne; Linshalm, Enikö; Ploder, Michael; Scholz, Anne-Marie; Töpfer, Stefan
  8. Green Cities? Urbanization, Trade and the Environment By Borck, Rainald; Pflüger, Michael P.
  9. Quasi Maximum Likelihood Estimation of Spatial Models with Heterogeneous Coefficients By Michele Aquaro; Natalia Bailey; M. Hashem Pesaran

  1. By: George Deltas; Dakshina De Silva; Robert P. McComb
    Abstract: We use geocoded administrative establishment data in Texas to estimate the effects of localization economies on the spatial persistence of industrial employment in the software industry. The choice of the software industry allows us to distinguish between the spatial persistence of employment due to human capital spillovers from that due to the labor pool channel. Unlike previous research, this analysis is independent of administrative boundaries. The results suggest that a location, defined as a 1-mile radius circle, with an initial concentration of software industry employment, retains a disproportionate number of employees 6 years later despite significant job turnover. Software industry employment in surrounding areas has small effects. The results are not driven by higher establishment growth rates in high concentration locations or by differences in survival probabilities. They are fully explained by: (i) the retention by other establishments in a location of jobs lost by an establishment in that location, and (ii) an increased propensity of software establishments to enter in or near locations with prior software establishment presence. The entry effect diminishes sharply beyond one mile. We demonstrate that these findings are most consistent with labor channel effects, although the presence of human capital spillovers cannot be fully excluded.
    Keywords: agglomeration economies, labor pools, knowledge spillovers, firm growth
    JEL: R12
    Date: 2015
  2. By: Grillitsch, Markus (CIRCLE, Lund University); Asheim, Björn (CIRCLE, Lund University; UiS Business School/Centre for Innovation Research, University of Stavanger; BI Norwegian Business School, Oslo)
    Abstract: The literature on cluster evolution suggests that heterogeneity of firm capabilities and openness of network structures are essential for the renewal of mature and declining clusters. This paper argues that the regional and institutional context in which clusters are embedded plays an important role for the renewal of clusters. It elaborates how the integration of institutional variety can stimulate the combination of different types of knowledge, learning and modes of innovation, thereby promoting cluster renewal. The conceptual argument is illustrated with a case study of the maritime cluster in Møre and Romsdal, Norway, which is one of the globally leading clusters in this industry. We find that key actors and policy play an important role in integrating institutional variety. Additionally, the case shows that institutional variety and the integration thereof can be a driving force for cluster renewal even in specialized and semi-peripheral locations.
    Keywords: cluster policy; institutions; path-renewal; path-creation; manufacturing; periphery
    JEL: B52 O10 O30 R30 R50
    Date: 2015–06–08
  3. By: Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
    Abstract: In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this “knowledge paradox” has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that “hidden” regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on “hidden” regional differences in entrepreneurial culture. To capture such “hidden” regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.
    Keywords: Innovation, Personality, Knowledge, Culture, Entrepreneurship, Psychology, Regions, Cities
    JEL: L26 M13 O3 O30
    Date: 2015
  4. By: Trevor Tombe; Xiaodong Zhu
    Abstract: We study how misallocation due to goods- and labour-market frictions affect aggregate productivity in China. Combining unique data with a general equilibrium model of internal and international trade, and migration across regions and sectors, we quantify the magnitude and consequences of trade and migration costs. The costs were high in 2000, but declined afterward. The decline accounts for roughly two-fifths of aggregate labour productivity growth in China between 2000 and 2005. Reductions in internal rather than international costs are particularly important. Despite the decline, migration costs are still high and potential gains from further reform are large.
    Keywords: migration, internal trade, spatial misallocation, gains from trade, aggregate productivity, China
    JEL: F1 F4 R1 O4
    Date: 2015–06–20
  5. By: Rickman, Dan S.; Wang, Hongbo
    Abstract: The spatial equilibrium growth model of Glaeser and Tobio (2008) is built upon the traditional static Rosen-Roback spatial equilibrium model. A distinguishing feature is the addition of a regionally-varying elasticity of housing supply, which was found empirically for the U.S. in a number of studies. Applications of the framework have been limited. But it is sufficiently flexible to be used in a wide variety of settings. Numerous policies and site characteristics of areas have the potential to simultaneously influence household amenity demand, firm productivity and elasticity of housing supply. The spatial equilibrium growth model not only ascertains the growth effects of policies and site characteristics, but it also assesses the channels through which they affect regional growth.
    Keywords: Spatial equilibrium; Housing supply
    JEL: R11 R12 R31
    Date: 2015–06–19
  6. By: Anna Missiaia
    Abstract: Italy has been characterized, throughout its history as a unified country, by large regional differentials in the levels of income, industrialization and socio-economic development. This paper aims at testing the New Economic Geography hypothesis on the role of market access in explaining these regional differentials. We first quantify market access of the Italian regions for benchmark years from 1871 to 1911 following Harris (1954). We then use these estimates to study the causal link between GDP per capita and market potential following Head and Mayer (2011). The main result of this paper is that only domestic market potential, which represents the home market, shows a "traditional" North-South divide. When international markets are introduced, the South does not appear to lag behind. Regression analysis confirms that market potential is a strong determinant of GDP per capita only in its domestic formulation. This suggests that the home market in this period mattered far more for growth than the international markets, casting new light on one of the classical explanations to the North-South divide.
    Keywords: Economic Geography; Economic History of Italy; Market Potential
    Date: 2015–06–18
  7. By: Rothgang, Michael; Cantner, Uwe; Dehio, Jochen; Engel, Dirk; Fertig, Michael; Graf, Holger; Hinzmann, Susanne; Linshalm, Enikö; Ploder, Michael; Scholz, Anne-Marie; Töpfer, Stefan
    Abstract: With its Leading-Edge Cluster Competition (in German: Spitzencluster-Wettbewerb; LECC), the Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF) is supporting innovation clusters in a nationwide contest for the first time. In three rounds, 15 cluster initiatives were selected and provided with funds to support them on their way to becoming international leaders in their field of technology, or, if they already held such a position, to maintain or expand their lead. Through a sustainable mobilisation of regional economic potentials, supporting the strategic development of Leading-Edge Clusters has the goal of increasing growth, securing or creating jobs and enhancing the attractiveness of Germany as a location for innovation and business. The BMBF contracted a project consortium to conduct an accompanying evaluation of the LECC. This consortium consisted of RWI, Essen (project coordination); the Institut für Sozialforschung und Gesellschaftspolitik GmbH (ISG), Cologne; the Chair of Economics/Microeconomics at the Friedrich SchillerUniversity Jena, as well as the JOANNEUM RESEARCH GmbH, Graz. This summary of the final report comprises the main findings of the accompanying evaluation of the LECC for the duration of the project from 11/2008 to 04/2014.
    Date: 2015
  8. By: Borck, Rainald (University of Potsdam); Pflüger, Michael P. (University of Würzburg)
    Abstract: This paper establishes a simple theoretical framework which comprises key forces that shape the structure and interrelation of cities to study the interdependencies between urban evolution and the environment. We focus on the potential of the unfettered market forces to economize on emissions. A key finding is that these forces alone may suffice to generate an urban Environmental Kuznets Curve. In particular, reducing trade costs increases per capita incomes and generates a U-shaped evolution of emissions in the process of agglomeration and redispersion. Another key result is that agglomeration per se is typically not a boon for the environment, as total emissions in the total city system are likely to rise.
    Keywords: city structure, city systems, environmental pollution, global warming, Environmental Kuznets Curve, trade costs, commuting costs, housing
    JEL: F18 Q50 R11 R12
    Date: 2015–06
  9. By: Michele Aquaro (University of Warwick); Natalia Bailey (Queen Mary University of London); M. Hashem Pesaran (University of Southern California and University of Cambridge)
    Abstract: This paper considers spatial autoregressive panel data models and extends their analysis to the case where the spatial coefficients differ across the spatial units. It derives conditions under which the spatial coefficients are identified and develops a quasi maximum likelihood (QML) estimation procedure. Under certain regularity conditions, it is shown that the QML estimators of individual spatial coefficients are consistent and asymptotically normally distributed when both the time and cross section dimensions of the panel are large. It derives the asymptotic covariance matrix of the QML estimators allowing for the possibility of non-Gaussian error processes. Small sample properties of the proposed estimators are investigated by Monte Carlo simulations for Gaussian and non-Gaussian errors, and with spatial weight matrices of differing degree of sparseness. The simulation results are in line with the paper's key theoretical findings and show that the QML estimators have satisfactory small sample properties for panels with moderate time dimensions and irrespective of the number of cross section units in the panel, under certain sparsity conditions on the spatial weight matrix.
    Keywords: Spatial panel data models, Heterogeneous spatial lag coefficients, Identification, Quasi maximum likelihood (QML) estimators, Non-Gaussian errors
    JEL: C21 C23
    Date: 2015–06

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