nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒06‒14
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Entrepreneurship Capital and Regional Productivity Revisited By Massón-Guerra, José Luis; Ortín-Ángel, Pedro
  2. Subways and urban growth: evidence from earth By Marco Gonzalez-Navarro; Matthew A. Turner
  3. Does technological progress magnify regional disparities? By Tabuchi, Takatoshi; Thisse, Jacques François; Zhu, Xiwei
  4. Identifying the Effects of Place-based Policies – Causal Evidence from Germany By Eva Dettmann; Matthias Brachert; Mirko Titze
  5. Regional importance of Mittelstand firms and innovation performance By Berlemann, Michael; Jahn, Vera
  6. A Spatial Diffusion Model with Common Factors and an Application to Cigarette Consumption By Carlo Ciccarelli; J. Paul Elhorst
  7. The Determinants of Non-residential Real Estate Values with Special Reference to Local Environmental Goods By Sofia F. Franco; W. Bowman Cutter

  1. By: Massón-Guerra, José Luis; Ortín-Ángel, Pedro
    Abstract: Entrepreneurship capital has been considered in the literature to be a public good, so it will positively affect the total factor productivity of the firms in a certain region. There is evidence confirming a positive relationship between entrepreneurship capital measures and regional production. This paper argues that this evidence could also be explained by the presence of decreasing returns to scale in firms’ production technology. So previous evidence may be mixing both effects: returns to scale and public goods. This paper provides a simple methodological benchmark for distinguishing between and measuring both effects. The analysis conducted using a sample of 52 Spanish provinces for eleven years confirms the presence of decreasing returns to scale. In our data, previous interpretations of the evidence overestimate the effect of regional entrepreneurship capital as a public good on the economy.
    Keywords: Entrepreneurship Capital, Regional Productivity, Scale Economies.
    JEL: L26 O4 O40 R11
    Date: 2016–04–01
  2. By: Marco Gonzalez-Navarro; Matthew A. Turner
    Abstract: We investigate the relationship between the extent of a city’s subway network, its population and its spatial configuration. To accomplish this investigation, for the 632 largest cities in the world, we construct panel data describing the extent of each of the 138 subway systems in these cities, their population, and measures of centralization calculated from lights at night data. These data indicate that large cities are more likely to have subways, but that subways have an economically insignificant effect on urban population growth. Consistent with economic theory and with other studies of the effects of transportation improvements on cities, our data also indicate that subways cause cities to be more decentralized. For a subset of subway cities we also observe panel data describing subway and bus ridership. We find that a 10% increase in subway extent causes about a 6% increase in subway ridership and has no effect on bus ridership. Consistent with the available literature describing the effect of roads on cities, our results are consistent with subways having a larger effect on the configuration of cities than on their sizes, and with subways having a larger effect on discretionary than commute travel.
    Keywords: subways; public transit; urban growth; urban decentralization
    JEL: R14 J01
    Date: 2016–04
  3. By: Tabuchi, Takatoshi; Thisse, Jacques François; Zhu, Xiwei
    Abstract: We study how technological progress in manufacturing and transportation to-gether with migration costs interact to shape the space-economy. Rising labor productivity in the manufacturing sector fosters the agglomeration of activities, whereas falling transport costs associated with technological and organizational in-novations fosters their dispersion. Since these two forces have been at work for a long time, the final outcome must depend on how drops in the costs of producing and trading goods interact with the various costs borne by migrants. Finally, when labor is heterogeneous, the most efficient workers of the less productive region are the first to move to the more productive region.
    Keywords: Economic geography, Labor productivity, Manufacturing industries, Transportation, New economic geography, Technological progress, Migration costs, Labor heterogeneity
    JEL: J61 R12
    Date: 2016–05
  4. By: Eva Dettmann; Matthias Brachert; Mirko Titze
    Abstract: The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.
    Keywords: evaluation, industrial policy, regression discontinuity design
    JEL: A11 D61 H20 Z00
    Date: 2016–05
  5. By: Berlemann, Michael; Jahn, Vera
    Abstract: Despite of the deeply rooted belief of politicians from all over the world in the important role of Mittelstand firms, there has been surprisingly little empirical research on this issue, yet. This article contributes to the literature by studying whether the relative regional importance of Mittelstand firms has an effect on regional innovation performance. Using a cross section of German NUTS-3-regions, a significantly positive relation between the relative importance of owner-managed SMEs and patent applications is identified. This finding is highly robust when controlling for spatial correlations as they often occur in highly disaggregated regional analyses.
    Keywords: Innovation,Mittelstand firms,Owner-management,SMEs,Germany
    JEL: O31 C21 D23
    Date: 2015
  6. By: Carlo Ciccarelli (DEF & CEIS,University of Rome Tor Vergata); J. Paul Elhorst (University of Groningen)
    Abstract: This paper adopts a dynamic spatial panel data model with common factors to explain the non-stationary diffusion process of cigarette consumption across 69 Italian provinces over the period 1877-1913. The Pesaran (2015) CD-test and the exponent a-test of Bailey et al. (2015) are used to show that both weak and strong cross-sectional dependence are important drivers of the propagation of cigarette demand over this period. Stability tests on the coefficients and the CD-test on the residuals of the model are used to verify whether the data and both forms of cross-sectional dependence are modeled adequately. Cigarettes are found to be a normal good with an income elasticity of 0.4 and a price elasticity -0.4 in the long term. The price elasticity can be decomposed into a direct effect of -0.54 in the own region and a spillover effect to other regions of 0.15. This positive spillover effect is in line with previous spatial econometric studies which investigated cigarette demand in the U.S. states over a more recent period.
    Keywords: diffusion, non-stationarity, spatial dependence, common factors, cigarette demand
    JEL: C21 C23 N33 N93 R22
    Date: 2016–05–31
  7. By: Sofia F. Franco; W. Bowman Cutter
    Abstract: This paper presents the results of an empirical study of the determinants of non-residential real estate values in Los Angeles County. The data base consists of 13, 370 property transactions from 1996 to 2005. Separate spatial econometric models are developed for industrial, commercial, retail and office properties. The study focus on the impact on property values of local amenities. Our analytical results provide insights on how amenities may affect non-residential properties values and how the impact may differ across property types. Our empirical results offer evidence that explicitly modeling spatial dependence is necessary for hedonic non-residential property models where there is interest in local amenities. We also show that it is also important to account for the temporal dimension since ignoring it can lead to misinterpretation of the real measure of spatial dependence over time. Moreover, we find that in general amenities that are jointly valuable to firms and household, such as parks or air quality have either weak or non-robust effects on nonresidential values. However, the fact that the joint amenities coastal access and crime appear to have stable correlations across specifications would be consistent with a higher firm than household valuation. In contrast, those amenities that are likely only valued by firms, such as transportation access and proximity to concentrations of skilled workers have robust and significant correlations with non-residential values. JEL codes: R52, H23
    Keywords: Non-residential property values, Local environmental amenities, Spatial econometrics
    Date: 2016
    Date: 2016

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