nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒07‒23
seventeen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Identifying the Effects of Place-based Policies – Causal Evidence from Germany By Dettmann, Eva; Brachert, Matthias; Titze, Mirko
  2. The Geography of City Liveliness and Land Use Configurations: Evidence from Location-Based Big Data in Beijing By Chengyu Li; Mark Wang; Jianghao Wang; Wenjie Wu
  3. Corporate Taxation and Firm Location in Germany By Zeddies, Götz
  4. The Drivers of Income Inequality in Cities: A Spatial Bayesian Model Averaging Approach By Miriam Hortas-Rico; Vicente Rios
  5. Where to Locate Innovative Activities in Global Value Chains: Does Co-location Matter? By Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
  6. Isolation and Innovation – Two Contradictory Concepts? Explorative Findings from the German Laser Industry By Kudic, Muhamed; Ehrenfeld, Wilfried; Pusch, Toralf
  7. Gentrification in London: A progress report, 2001–2013 By Alex Fenton
  8. Spatial microsimulation estimates of household income distributions in London boroughs, 2001 and 2011 By Alex Fenton
  9. Regulation, Red Tape and Location Choices of Top R&D Investors By Daria Ciriaci; Nicola Grassano; Antonio Vezzani
  10. The Gift of Moving: Intergenerational Consequences of a Mobility Shock By Emi Nakamura; Jósef Sigurdsson; Jón Steinsson
  11. High-Speed Railroad and Economic Geography: Evidence from Japan By Li, Zhigang; Xu, Hangtian
  12. Technological progress and (un)employment development By Blien, Uwe; Ludewig, Oliver
  13. Multi-plant operation and corporate headquarters separation: Evidence from Japanese plant-level By Toshihiro Okubo; Eiichi Tomiura
  14. Economic issues of innovation clusters-based industrial policy : a critical overview By Iritié, B. G. Jean Jacques
  15. The role of innovation and agglomeration for employment growth in the environmental sector By Horbach, Jens; Janser, Markus
  16. Equilibrium Commuting By Berliant, Marcus; Tabuchi, Takatoshi
  17. Aglomerações Urbanas no Brasil e na América do Sul: Trajetórias e Novas Configurações By Rosa Moura; Bolívar Pêgo

  1. By: Dettmann, Eva; Brachert, Matthias; Titze, Mirko
    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
  2. By: Chengyu Li; Mark Wang; Jianghao Wang; Wenjie Wu
    Abstract: This paper explores the complexity in the connection between city liveliness and land use configurations for housing and consumption amenities. The sources of this complexity are captured by an integrated spatial and temporal non-stationary modelling approach that uses local linear methods to estimate heterogeneous dynamics of the spatial-temporal process. City liveliness is measured by aggregated space-time human activity intensities using mobile phone positioning data from Beijing. We find that the land use configurations for housing amenities contribute little to city liveliness, whereas consumption amenities play a significant role in attracting human activity intensities. However, such effects vary substantially over space and during a 24-hour life span. These results provide the estimates of the changes in hourly human activity distribution that would influence the form of social engagement, development patterns, and public investment policy.
    Keywords: big data, GTWR, local linear estimator, city liveliness, land use, China
    JEL: C14 P25
    Date: 2016–07
  3. By: Zeddies, Götz
    Abstract: German Fiscal Federalism is characterized by a high degree of fiscal equalization which lowers the efficiency of local tax administration. Currently, a reform of the fiscal equalization scheme is on the political agenda. One option is to grant federal states the right to raise surtaxes on statutory tax rates set by the central government in order to reduce the equalization rate. In such an environment, especially those federal states with lower economic performance would have to raise comparatively high surtaxes. With capital mobility, this could further lower economic performance and thus tax revenues. Although statutory tax rates are so far identical across German federal states, corporate tax burden differs for several reasons. This paper tries to identify the impact of such differences on firm location. As can be shown, effective corporate taxation did seemingly not have a significant impact on firm location across German federal states.
    Abstract: Der deutsche Länderfinanzausgleich ist durch eine starke Nivellierung der Finanzkraft der Bundesländer gekennzeichnet. Dies geht mit negativen Anreizen für die Finanzverwaltungen der Bundesländer einher. Mit Blick auf das Auslaufen des Länderfinanzausgleichs im Jahr 2019 werden derzeit Reformoptionen diskutiert, unter anderem eine Erhöhung der Steuerautonomie der Bundesländer, in deren Rahmen den Ländern ein Zuschlagsrecht bei der Einkommensteuer eingeräumt und im Gegenzug der Ausgleichstarif im Länderfinanzausgleich verringert werden könnte. Eine derartige Reform würde jedoch bedeuten, dass gerade die finanzschwachen Bundesländer relativ hohe Zuschlagssätze erheben müssten, um ähnlich hohe Einnahmen je Einwohner zu erzielen wie die finanzstarken Länder. Sofern sich dies negativ auf die Unternehmensansiedlungen in finanzschwachen Bundesländern auswirkt, würde deren Finanzkraft weiter geschwächt. Vor diesem Hintergrund untersucht der vorliegende Beitrag, ob bereits bestehende Unterschiede in der effektiven Steuerlast zwischen den Bundesländern die Unternehmensansiedlung beeinflussen. Im Ergebnis zeigt sich, dass ein solcher Einfluss in den vergangenen Jahren nicht bestand.
    Keywords: fiscal equalization,corporate taxation,surtaxes,firm location,Länderfinanzausgleich,Besteuerung,Zuschlagsrechte,Standortwahl
    JEL: H25 H32 H71 H77
    Date: 2015
  4. By: Miriam Hortas-Rico; Vicente Rios
    Abstract: This study analyzes the drivers of urban income inequality. To that aim, we focus on the case of Spain and derive a novel data set of inequality metrics for a sample of municipalities over the period 2000-2006. Spatial Bayesian Model Averaging techniques are used in order to examine the empirical relevance of a large set of factors taking into account the role of spatial interactions. Our findings suggest that urban inequality is mainly explained by human capital, economic factors and local politics rather than amenities or demography. The results are robust to the use of different spatial functional forms and spatial weight matrices.
    Date: 2016–07
  5. By: Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
    Abstract: With the emergence of global value chains (GVCs), production processes are increasingly fragmented and dispersed across different countries. Although many MNEs still exhibit an important ‘home bias’ in their global innovation activities, a growing number of firms have offshored R&D and innovative activities to foreign locations. Is the more recent offshoring of R&D and innovation linked to the prior waves of manufacturing offshoring? The fear in OECD economies is that because of co-location effects between production and innovative activities, the loss of certain manufacturing/assembly activities may result in a loss of innovative capabilities (R&D, design, etc.) in the longer-term. The offshoring of R&D and innovation within GVCs poses new challenges to economic policy in OECD and emerging economies. For example, how can countries attract inward R&D investments by foreign MNEs? Should outward R&D investments by MNEs be a concern for the countries in which the MNEs are headquartered?
    Date: 2016–07–12
  6. By: Kudic, Muhamed; Ehrenfeld, Wilfried; Pusch, Toralf
    Abstract: We apply a network perspective and study the emergence of core-periphery (CP) structures in innovation networks to shed some light on the relationship between isolation and innovation. It has been frequently argued that a firm's location in a densely interconnected network area improves its ability to access information and absorb technological knowledge. This, in turn, enables a firm to generate new products and services at a higher rate compared to less integrated competitors. However, the importance of peripheral positions for innovation processes is still a widely neglected issue in literature. Isolation may provide unique conditions that induce innovations which otherwise may never have been invented. Such innovations have the potential to lay the ground for a firm's pathway towards the network core, where the industry's established technological knowledge is assumed to be located. The aim of our paper is twofold. Firstly, we propose a new CP indicator and apply it to analyze the emergence of CP patterns in the German laser industry. We employ publicly funded Research and Development (R&D) cooperation project data over a period of more than two decades. Secondly, we explore the paths on which firms move from isolated positions towards the core (and vice versa). Our exploratory results open up a number of new research questions at the intersection between geography, economics and network research.
    Abstract: Wir legen eine Netzwerkperspektive zugrunde und untersuchen die Entstehung von Kern-Peripherie- (CP-) Strukturen in Innovationsnetzwerken, um den Zusammenhang zwischen Isolation und Innovation vertiefend zu beleuchten. In bisherigen Studien wurde argumentiert, dass die Lage eines Unternehmens in dicht verknüpften Bereichen eines Netzwerks seine Fähigkeit verbessert, auf Informationen zuzugreifen und technologisches Wissen zu absorbieren. Dies erlaubt es solchen Unternehmen, neue Produkte und Dienstleistungen in einem höheren Maße zu generieren als weniger integrierte Konkurrenzunternehmen. Die Bedeutung peripherer Positionen für Innovationsprozesse ist jedoch bisher ein weitestgehend vernachlässigter Aspekt in der Literatur. Isolation kann ein einzigartiges Umfeld bereitstellen, das Innovationen induzieren kann, die anderenfalls niemals entstanden wären. Solche Innovationen können die Grundlage für den Pfad eines Unternehmens in Richtung des Netzwerk-Kerns bilden, von dem angenommen wird, dass sich dort das in der Branche etablierte technologische Wissen konzentriert. Unser Beitrag verfolgt zwei Ziele. Erstens schlagen wir einen neuen CP-Indikator vor und wenden ihn an, um die Entstehung von CP-Strukturen in der deutschen Laserindustrie zu analysieren. Dazu verwenden wir Projektdaten zu öffentlich geförderten Kooperationen über einen Beobachtungszeitraum von mehr als zwei Jahrzehnten. Zweitens untersuchen wir die Pfade, auf denen sich Unternehmen aus isolierten Positionen in Richtung des Kerns bewegen (und umgekehrt). Unsere Ergebnisse eröffnen eine Reihe von Fragestellungen an der Schnittstelle zwischen Geographie, Wirtschaft und Netzwerkforschung.
    Keywords: innovation networks,core-periphery,laser industry,Innovationsnetzwerke,Kern-Peripherie,Laserindustrie
    JEL: C45 D85 O31 O32
    Date: 2015
  7. By: Alex Fenton
    Abstract: This paper investigates changes in the composition and spatial distribution of income poverty in London from 2001 to 2013, and considers them as evidence of gentrification. It is first argued that income poverty measures address some of the shortcomings of conventional occupational class statistics in gentrification research. The empirical analysis, using poverty proxies and spatial microsimulation income estimates, show that in the poorest, eastern parts of inner London, poverty rates fell. Here there was intense development and valorisation of land and housing around the financial districts, rapid population growth, and absolute falls in the numbers of the out-of-work poor. Poverty rates rose in the relatively disadvantaged parts of outer London. This is accounted for partly by rises in out-of-work poverty, but predominantly by the impoverishment of low-income workers through their wages becoming insufficient relative to housing costs. The paper thus confirms broad changes in the spatial distribution of poverty identified in recent studies, while pointing to the exploitation of labour and land as central mechanisms in explaining patterns of gentrification and proletarianisation in the city.
    Keywords: London, gentrification, poverty
    JEL: R23
    Date: 2016–07
  8. By: Alex Fenton
    Abstract: Spatial microsimulation (SMS) is a range of techniques for estimating the local distribution of a variable - here, household income - by combining social survey microdata with Census or administrative population totals. This paper makes a case for the value of these methods in social policy analysis of spatial economic differences because unlike other methods and sources, they permit distributional analysis of income, encompass both market outcomes and secondary distribution through taxes and transfers, and measure income poverty in standard national terms. As a demonstration of spatial microsimulation by iterative proportional fitting (IPF), the household income distribution in London's 33 boroughs in 2001/02 and 2011/12 is estimated in this paper. The coherence and plausibility of the results in comparison to other official statistics is examined in some detail. Two refinements to standard IPF methods are presented, including "multi-level IPF", which allows the use of both person- and household-level data; this is found to improve the estimation of poverty rates. The paper confirms the value of SMS for synchronic spatial analysis, and argues for its hitherto little-explored use in modelling spatial differences in the effects of fiscal and welfare policy changes.
    Keywords: microsimulation, income estimation, poverty, spatial inequality
    JEL: C81
    Date: 2016–07
  9. By: Daria Ciriaci; Nicola Grassano; Antonio Vezzani
    Abstract: This paper investigates how product and labour market regulations and red tape affect the way in which top corporate research and development (R&D) investors worldwide organise their crossborder operations. The decision about where a company locates its international subsidiaries is modelled using location-specific framework conditions, socio-economic factors and other controls commonly used in the economic geography literature. The location decision drivers are estimated using a multilevel mixed-effects logistic regression, controlling for both fixed and random effects. Our results confirm that both product market regulation (PMR) and employment protection legislation (EPL) significantly affect the location decisions of top R&D investors, as well as red tape and profit tax. The marginal effect of PMR is by far the largest, followed by EPL; the cost of starting a business and profit tax show lower marginal effects. Moreover, we found that (i) PMR and EPL exert a mutually reinforcing negative effect on the location decision of top R&D investors and (ii) of the three components of the PMR indicator —barriers to trade and investment, state control and barriers to entrepreneurship—the latter is the one with the lowest marginal effect. Policy implications are drawn accordingly.
    JEL: F23 D22 L20
    Date: 2016–05
  10. By: Emi Nakamura; Jósef Sigurdsson; Jón Steinsson
    Abstract: We exploit a volcanic “experiment” to study the costs and benefits of geographic mobility. We show that moving costs (broadly defined) are very large and labor therefore does not flow to locations where it earns the highest returns. In our experiment, a third of the houses in a town were covered by lava. People living in these houses where much more likely to move away permanently. For those younger than 25 years old who were induced to move, the “lava shock” dramatically raised lifetime earnings and education. Yet, the benefits of moving were very unequally distributed within the family: Those older than 25 (the parents) were made slightly worse off by the shock. The town affected by our volcanic experiment was (and is) a relatively high income town. We interpret our findings as evidence of the importance of comparative advantage: the gains to moving may be very large for those badly matched to the location they happened to be born in, even if differences in average income are small.
    JEL: E24 J61 O15 R23
    Date: 2016–07
  11. By: Li, Zhigang (Asian Development Bank); Xu, Hangtian (Hunan University)
    Abstract: This study addresses the debate on whether high-speed railroad (HSR) polarizes or balances economic geography. We find that both can occur: while the service sector tends to agglomerate, the manufacturing sector may decentralize; moreover, economic activities may agglomerate from distant areas to the core, while dispersing from the core toward its periphery at the same time. The service sector is crucial in this process because, unlike other land transport infrastructure, HSR mainly saves transport time for people, but not cargo. Incorporating this feature to the model of Ottaviano et al. (2002), we show that HSR can lead to either polarization or diffusion depending on sector and distance between cities. This is supported by empirical evidence from the 1982 opening of two major HSRs in Japan (Shinkansen), which saved intercity travel time by as much as half. We find that in noncore areas service employment decreased by 7%, while manufacturing employment increased by 21%; cities within approximately 100 kilometers of Tokyo expanded, while more distant cities shrank. In net, Tokyo metropolitan area agglomerates as a result of HSR.
    Keywords: economic corridor; high-speed rail; inclusive growth
    JEL: H54 O18 R12
    Date: 2016–05–31
  12. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Ludewig, Oliver (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "One of the key issues in economics is the explanation of unemployment and its variation across different economies. Modern mainstream macroeconomics refers to the effects of financial crises and to institutional structures and their variation across countries. However, unemployment within the European states varies nearly as much as between these countries. In the interior of a country, however, there are only minor differences in institutions. To solve this puzzle, we explain this variation of unemployment building on the regional industry composition and technological progress. It is shown formally that under general and standard preconditions the price elasticity of demand on product markets is decisive: Technological progress leads to an expansion of employment if product demand is elastic. It is accompanied, however, by shrinkage of employment if product demand is inelastic. A transition from the elastic into the inelastic range of the demand function for the most important product(s) can already suffice to plunge a region into crisis. In our empirical analysis we use industry level time series data on output, prices, employment and national income for Germany provided by the Federal Statistical Office. We estimate Marshallian type demand functions using an instrumental variables estimator to derive the price elasticities for different industries and link this information to the regional labour market performance of the respective industries and regions." (Author's abstract, IAB-Doku) ((en))
    JEL: Q33 R11 J23
    Date: 2016–07–12
  13. By: Toshihiro Okubo (Faculty of Economics, Keio University); Eiichi Tomiura (Graduate School of Economics, Hitotsubashi University)
    Abstract: This paper shows (i) under what circumstances corporate headquarters (HQs) are separated from production plants and (ii) what type of plants are operated by multi-plant firms. By analyzing Japanese plant-level panel data from manufacturing census, we find that large-sized plants or plants intensively purchasing materials significantly tend to be separated from HQs and become a part of multi-plant operations. This pattern suggests an impact of managerial burden. We confirm the robustness of our main findings by dynamic switching patterns of plant status. Factors of economic geography, such as distance from core, also have noticeable impacts.
    Keywords: Corporate headquarters, Multi-plant operation
    JEL: L22 L23 R32
    Date: 2016–06–27
  14. By: Iritié, B. G. Jean Jacques
    Abstract: Criticisms vis-à-vis cluster policy are numerous, often confusing and really unhelpful; while some authors systematically question the merits, others on the contrary play a genuine role of counsel in his favour. This paper attempts to refocus the debate and analyses the economic issues, impacts and implications of the innovation clusters policy. To do this, we take a critical view of the literature on clusters, focusing on analysis of the effects of three industrial dynamics in perpetual movement within clusters, especially research and development, industrial location and technology cooperation. We assume that innovation cluster "potentiates", by a synergistic action, the beneficial effect of each of these three industrial dynamics in favour of localised firms. However, it appears from the analysis that the hopes and expectations invested in cluster policy must be reconsidered and relativised. So the reasons for the rising power of cluster policies must be sought elsewhere than in a necessarily consensual and tangible evidence of positive impacts of clusters.
    Keywords: cluster,innovation,competitiveness pole,research and development,industrial location,technology cooperation,localised knowledge spillovers,LKS,epistemic communities
    JEL: O25 O30 R10
    Date: 2016
  15. By: Horbach, Jens; Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The environmental sector is supposed to yield a dual benefit: its goods and services are intended to help to tackle environmental challenges and its establishments should create new jobs. However, it is still unclear in empirical terms whether that really is the case. This paper investigates whether employment growth in 'green' establishments with 'green' products and services is higher compared to other establishments. Furthermore, the main factors determining labor demand in this field are analyzed. We use linked employment and regional data for Germany. The descriptive results show that the environmental sector is characterized by disproportionately high employment growth. The application of both a generalized linear mixed model and an instrumental variables regression reveals that especially innovation and industry agglomeration foster employment growth in establishments in the environmental sector. Establishments without green products and services show a smaller increase in employment, even if they are also innovative." (Author's abstract, IAB-Doku) ((en))
    Keywords: Umweltschutzindustrie, Beschäftigungseffekte, Innovation, Arbeitskräftenachfrage
    JEL: J23 Q52 Q55 R23
    Date: 2015–05–28
  16. By: Berliant, Marcus; Tabuchi, Takatoshi
    Abstract: We consider the role of a nonlinear commuting cost function in determination of the equilibrium commuting pattern where all agents are mobile. Previous literature has considered only linear commuting cost, where in equilibrium, all workers are indifferent about their workplace location. We show that this no longer holds for nonlinear commuting cost. The equilibrium commuting pattern is completely determined by the concavity or convexity of commuting cost as a function of distance. We show that a monocentric equilibrium exists when the ratio of the firm agglomeration externality to commuting cost is sufficiently high. Finally, we find empirical evidence of both long and short commutes in equilibrium, implying that the commuting cost function is likely concave.
    Keywords: Commuting; Land rent; Wage gradient
    JEL: R13 R41
    Date: 2016–07–15
  17. By: Rosa Moura; Bolívar Pêgo
    Abstract: A pesquisa Rede Urbana e Território, em desenvolvimento na Diretoria de Estudos e Políticas Regionais, Urbanas e Ambientais (Dirur) do Ipea, vem dando continuidade às atividades voltadas à análise das dinâmicas, caracterização e prospecção sobre as aglomerações urbanas e o sistema urbano-regional brasileiro. Com foco no período 2000-2014, destaca as transformações ocorridas nas relações entre os territórios, no perfil demográfico, produtivo e funcional dos municípios e suas relações com o exterior, bem como na configuração e tendência de organização socioespacial do continente sul-americano, a fim de contribuir para a definição de estratégias de apoio à formulação e à execução da política de desenvolvimento territorial (urbano e regional) em escala nacional e regional, além de subsidiar estudos, pesquisas e políticas dessa ordem também nas escalas do subcontinente e dos estados da Federação. Esta pesquisa se justifica uma vez que, ao longo da última década, o processo de urbanização do país e do continente se intensificou. A criação de novas cidades, o crescimento das pequenas e médias, o adensamento populacional em áreas já consolidadas e a ocupação de frentes pioneiras são alguns dos fenômenos que caracterizam o processo em curso. Para a compreensão da natureza do movimento de urbanização, os fenômenos mencionados necessitam ser identificados, detalhadamente caracterizados e sua análise aprofundada, especialmente no que se refere ao papel funcional dos centros urbanos, à reestruturação produtiva (em especial quanto à desconcentração industrial e à expansão da fronteira agrícola), à dinâmica demográfica dos municípios e das cidades e à infraestrutura econômica, social e urbana existente – incluindo as redes logísticas. The Urban Network and Territory research, developing in the Directory of Studies and Regional, Urban and Environmental Policies (Dirur) of the Ipea, comes following the activities focused on dynamic analysis, characterization and prospect about the urban agglomerations and the urban-regional system. With focus 2000-2014 period, highlights the changes in relations between the territories, demographic profile, productive and functional of the municipalities and their relations with the outside world, as well as in the configuration and trend of socio-spatial organization of the South American continent, in order to contribute to the development of strategies to support the formulation and implementation of territorial development policy (urban and regional) national and regional scale, In addition to subsidizing studies, research and policies of that order in scales of the subcontinent and the States of the Federation. This research is justified since over the last decade, the process of urbanization in the country and the continent have intensified. The creation of new towns, the growth of small and medium-sized cities, the population density in areas already consolidated and the occupation of pioneer fronts are some of the phenomena that characterize the ongoing process. For understanding the nature of the process of urbanization, the phenomena mentioned above need to be more clearly identified and characterized in detail, and enlarged its analysis, especially with regard to the functional role of urban centres, productive restructuring which took place (in particular the processes of industrial de-concentration and expansion of the agricultural frontier), the demographic dynamics of the cities and towns and economic infrastructure , and existing urban social-including logistic networks.
    Date: 2016–06

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