nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒08‒14
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. A Spatial Analysis to Permanent Income as Deterrent of Homicides: the case of Medellin City By Joaquin A. Urrego; Catalina Gómez Toro; Hermilson Velásquez
  2. Colocation and Knowledge Diffusion: Evidence from Million Dollar Plants By Christian Fons-Rosen; Vincenzo Scrutinio; Katalin Szemeredi
  3. The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium By christoph Eder; Martin Halla
  4. Research Funding and Regional Economies By Nathan Goldschlag; Stefano Bianchini; Julia Lane; Joseba SanMartin Sola; Bruce Weinberg
  5. Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale By Konstantin Kucheryavyy; Gary Lyn; Andrés Rodríguez-Clare
  6. Missing Men:World War II Casualties and Structural Change By christoph Eder
  7. Territorial Unbalances in Quality of Life. A focus on Italian Inner and Rural Areas By Bertolini, P.; Pagliacci, F.

  1. By: Joaquin A. Urrego; Catalina Gómez Toro; Hermilson Velásquez
    Abstract: This paper studies the relationship between permanent income and homicides, estimating an income-crime elasticity. We assume that this elasticity varies across geographical areas. We estimate different specifications of Spatial Panel Models using information of urban areas in Medellin (Colombia), areas known as communes. Spatial Models consider the importance of location and the type of neighbors of each commune. We simulate an intervention over permanent income in order to estimate the income elasticity for each commune and the average elasticity of income-crime on the city. We provide evidence about spatial dependence between the homicides per commune and their neighbors, and about a relationship between homicides and neighbor’s income. In our case of study, the average estimated impact of 1% increase in permanent income in a specific commune produces a decrease in the homicide rate on average in 0.39%. Finally, permanent income plays a crime deterrent role, but also this effect of income on crime varies across the city, showing that some areas are strategically located to this kind of intervention.
    Keywords: Permanent income, Homicides, Spatial panel, Elasticity
    JEL: K4 C23 R12 R23
    Date: 2016–05–04
  2. By: Christian Fons-Rosen; Vincenzo Scrutinio; Katalin Szemeredi
    Abstract: This paper uses the entry of large corporations into U.S. counties during the 1980s and 1990s to analyse the effect of plant opening on knowledge spillovers to local inventors. We use a difference-in-differences identification strategy exploiting information on the revealed ranking of possible locations for large plants in the US. Under the identifying assumption that locations not chosen (losers) are a counterfactual for the chosen location (winner), we find that patents of these large corporations are 68% more likely to be cited in the winning counties relative to the losing counties after entry. The effect materializes after the opening of the plant, rather than after the entry decision itself. The increase in citations is stronger for more recent patents whereas patent quality does not seem to play an important role. We find that the increase in citations is larger from patents belonging to the same technology class of the cited patent.
    Keywords: productivity, innovation, knowledge diffusion
    JEL: O3 R11 R12
    Date: 2016–08
  3. By: christoph Eder (University of Innsbruck, Department of Public Finance, Universitätsstraβe 15/4, 6020 Innsbruck, Austria); Martin Halla (University of Innsbruck, and IZA, Bonn)
    Abstract: As a consequence of World War II, Austria was divided into four different occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line became obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity.
    Keywords: spatial equilibrium, agglomeration effects, population shock, World War II, Austria.
    JEL: R11 R12 R23 J61 N44 N94
    Date: 2016–08
  4. By: Nathan Goldschlag; Stefano Bianchini; Julia Lane; Joseba SanMartin Sola; Bruce Weinberg
    Abstract: Public support of research typically relies on the notion that universities are engines of economic development, and that university research is a primary driver of high wage localized economic activity. Yet the evidence supporting that notion is based on aggregate descriptive data, rather than detailed links at the level of individual transactions. Here we use new micro-data from three countries - France, Spain and the United States - to examine one mechanism whereby such economic activity is generated, namely purchases from regional businesses. We show that grant funds are more likely to be expended at businesses physically closer to universities than at those farther away. In addition, if a vendor has been a supplier to a grant once, that vendor is subsequently more likely to be a vendor on the same or related grants. Firms behave in a way that is consistent with the notion that propinquity is good for business; if a firm supplies a research grant at a university in a given year it is more likely to open an establishment near that university in subsequent years than other firms.
    Keywords: Science policy, innovation, regional economic development, UMETRICS
    Date: 2016–07
  5. By: Konstantin Kucheryavyy; Gary Lyn; Andrés Rodríguez-Clare
    Abstract: Although economists have long been interested in the implications of Marshallian externalities (i.e., industry-level external economies of scale) for trading economies, the large number of equilibria that they typically imply has kept such externalities out of the recent quantitative trade literature. This paper presents a multi-industry trade model with industry-level economies of scale that nests a Ricardian model with Marshallian externalities as well as multi-industry versions of Krugman (1980} and Melitz (2003). The behavior of the model depends on two industry-level elasticities: the trade elasticity and the scale elasticity. We show that there is a unique equilibrium if the product of the trade and scale elasticities is weakly lower than one in all industries. The welfare analysis reveals that if this condition is satisfied then all countries gain from trade, even when the scale elasticity varies across industries. The presence of scale economies tends to lower the gains from trade except if the country specializes in industries with relatively high scale elasticities. On the other hand, scale economies amplify the gains from trade liberalization except if it leads to reallocation towards industries with relatively low scale elasticities.
    JEL: F10
    Date: 2016–08
  6. By: christoph Eder (University of Innsbruck, Department of Public Finance, Universitätsstraβe 15/4, 6020 Innsbruck, Austria)
    Abstract: A shock to the sector composition of the local labor market can affect long-run economic development of a location. Because structural change ultimately shifts labor from agriculture to services, an early transition to manufacturing may hamper longrun prosperity. The identification strategy exploits military World War II (WWII) casualties in Austrian municipalities as an exogenous shock to the local labor market. WWII casualties shifted labor out of agriculture into manufacturing in the short-run, which eventually led to a differential path of structural change. In the long-run, I find a strong and robust negative effect of WWII casualties on subsequent economic output.
    Keywords: Spatial equilibrium, local labor markets, structural change, World War II, Austria.
    JEL: R11 R12 J40 N14
    Date: 2016–08
  7. By: Bertolini, P.; Pagliacci, F.
    Abstract: The Italian National Strategy for Inner Areas explicitly draws policymakers’ attention to inner municipalities. It stresses the importance of improving socio-economic conditions of people as the only way to reverse negative demographic trends in those areas. To this respect, improving quality of life (QoL) represents one of the key drivers. Given such an important policy implication, this work provides a statistical tool to measure existing gaps in QoL levels across Italian NUTS 3 regions, by explicitly disentangling urban and inner areas. Nevertheless, QoL is a multidimensional concept, thus a composite indicator is computed following a non-compensatory approach: the QoL Mazziotta-Pareto Index. Firstly, we consider the variability of the comprehensive indicator across Italy, with respect to the presence of inner areas. As a major result, this analysis seems breaking down the supposed negative relationship between QoL and presence of inner areas, which the paper proves to be mostly overlapping with rural ones, when controlling for sub-national structural divides occurring throughout Italy. Secondly, spatial aspects make the picture even more complex. Even the neighbouring space is expected to affect QoL at local level. In particular, by means of both global and local indicators of spatial autocorrelation, groups of NUTS 3 regions sharing similar QoL levels with their neighbours are detected. From a policy perspective, such a locked-in path among neighbouring regions can influence the effectiveness of place-based policies.
    Keywords: inner areas, rural areas, quality of life, spatial effects, Agricultural and Food Policy, Community/Rural/Urban Development, Public Economics, O18, R00, R10, R11,
    Date: 2016–07
  8. By: Craig Wesley Carpenter
    Abstract: This paper takes advantage of the Michigan Census Research Data Center to merge limited access Census Bureau data with county level information to investigate the impact of Latino-owned business (LOB) employment share on local economic performance measures, namely per capita income, employment, poverty, and population growth. Beginning with OLS and then moving to the Spatial Durbin Model, this paper shows the impact of LOB overall employment share is insignificant. When decomposed into various industries, however, LOB employment share does have a significant impact on economic performance measures. Significance varies by industry, but the results support a divide in the impact of LOB employment share in low and high-barrier industries.
    Date: 2016–07

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