nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒11‒20
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Agglomeration Economies and Firm Level Labor Misallocation By Lionel Fontagné; Gianluca Santoni
  2. Entrepreneurial Spillovers over Space and Time By Frank M. Fossen; Thorsten Martin
  3. Classifying Industries Into Types of Relative Concentration By Ludwig von Auer; Andranik Stepanyan; Mark Trede
  4. Migration and urbanisation in Post-Apartheid South Africa By Ferdinand Rauch; Christopher Parsons
  5. Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data By Rycx, Francois; Saks, Yves; Tojerow, Ilan
  6. Polarization and the growth of low-skill employment in Spanish Local Labor Markets By Davide Consoli; Mabel Sánchez-Barrioluengo
  7. A critical review of entrepreneurial ecosystems: towards a future research agenda By Yana Borissenko; Ron Boschma
  8. The Gravity Model of Migration: The Successful Comeback of an Ageing Superstar in Regional Science By Poot, Jacques; Alimi, Omoniyi; Cameron, Michael P.; Maré, Dave C.
  9. New Business Formation and Incumbents' Perception of Competitive Pressure By Javier Changoluisa; Michael Fritsch
  10. Functional Urban Areas in Colombia By Daniel Sanchez-Serra

  1. By: Lionel Fontagné; Gianluca Santoni
    Abstract: A large portion of productivity differentials among locations is related to density. Firms located in denser areas are more productive due to agglomeration economies (Combes et al., 2012a). We provide in this paper an explanation of such economies: lower input misallocation. The distribution of resources among heterogeneous fi rms has relevant consequences on allocative effi ciency and denser areas provide a more favorable environment for dynamic matching between employers and employees. Using a methodology proposed by Petrin and Sivadasan (2013) we are able to assess the degree of resource misallocation among fi rms within sectors for each of the 96 French “Départements” and 347 Employment Areas (commuting zones). Based on fi rm-level productivity estimates, we identify in the gap between the value of the marginal product and marginal input price the degree of inputs allocation at the fi rm level. Over the period 1993-2007 the average gap at fi rm level is around 9 thousands euro, showing a relevant increase starting from the early 2000s. Importantly, fi rms’ misallocations are lower in denser areas, suggesting that the matching mechanism is playing a role in explaining the productivity premium of agglomerated locations.
    Keywords: Misallocation;Agglomeration;Productivity;Firm Level Data
    JEL: D24 R12 L25 O47
    Date: 2016–11
  2. By: Frank M. Fossen; Thorsten Martin
    Abstract: Entrepreneurship is a local and dynamic phenomenon. We jointly investigate spatial spillovers and time persistence of regional new business formation. Using panel data from all 402 German counties for 1996-2011, we estimate dynamic spatial panel models of business creation in the high-tech and manufacturing industries. We consider regions of different sizes and systematically search for the most suitable spatial weighting matrices. We find substantial spatial spillovers as well as time persistence of start-up activity, especially in the high-tech industry. This indicates that entrepreneurship is deeply rooted in regions and underlines the importance of local entrepreneurship culture for new business formation.
    Keywords: Entrepreneurship, new business formation, spatial spillovers, path dependency, persistence, spatial panel
    JEL: L26 C23 R12 O30
    Date: 2016
  3. By: Ludwig von Auer; Andranik Stepanyan; Mark Trede
    Abstract: When some industries are overrepresented in urban areas (urban concentration), some other industries must be overrepresented in rural areas (rural concentration). Existing measures of concentration do not distinguish between these different types of concentration. Instead, they rank industries according to their degree of concentration. However, knowing the concentration type is important, when investigating the forces of agglomeration that shape the geographical distribution of an industry. Therefore, the present paper proposes a new statistical approach that classifies each industry into one of seven different geographical patterns, five of which represent different types of concentration. The statistical identification of each industry’s geographical pattern is based on two Goodman-Kruskal rank correlation coefficients. The power of our approach is illustrated by German employment data on 613 different industries in 412 regions.
    Keywords: Geographical Concentration, Archetypes, Confidence Region, Goodman-Kruskal Coefficient
    JEL: R10 R12
    Date: 2016
  4. By: Ferdinand Rauch; Christopher Parsons
    Abstract: Under apartheid, black South Africans were severely restricted in their choice of location and many were forced to live in homelands. Following the abolition of apartheid they were free to migrate. Given gravity, a town nearer to the homelands can be expected to receive a larger inflow of people than a more distant town following the removal of mobility restrictions. Exploting this exogenous variation, we study the effect of migration on urbanisation and the distribution of population. In particular, we test if migration inflows led to displacement, path dependence, or agglomeration in destination areas. We find evidence for path dependence in the aggregate, but substantial heterogeneity across town densities. An exogenous population shock leads to an increase of the urban relative to the rural population, which suggests that exogenous migration shocks can foster urbanisation in the medium run.
    Keywords: Economic geography, migration, urbanisation, natural experiment
    JEL: R12 R23 N97 O18
    Date: 2016–07–28
  5. By: Rycx, Francois (Free University of Brussels); Saks, Yves (National Bank of Belgium); Tojerow, Ilan (Free University of Brussels)
    Abstract: This paper is one of the first to estimate how the region in which an establishment is located affects its productivity, wage cost and cost competitiveness (i.e. its productivity-wage gap). To do so, we use detailed linked employer-employee panel data for Belgium and rely on methodological approaches from both Hellerstein and Neumark (1995) and Bartolucci (2014) to estimate dynamic panel data models at the establishment level. Our findings show that interregional differences in productivity and wages are significant but vanish almost totally, both in industry and services, when controlling for a wide range of covariates, establishment fixed effects and endogeneity. Thus, our results suggest that wage cost and productivity differentials are ceteris paribus relatively well aligned across regions.
    Keywords: regions, productivity, labour costs, linked panel data
    JEL: C33 J24 J31 R30
    Date: 2016–10
  6. By: Davide Consoli; Mabel Sánchez-Barrioluengo
    Abstract: This paper analyses the long-term transformations of local labor markets in fifty Spanish provinces to identify the extent and the drivers of employment polarization. We find that the decline of ‘routine’ mid-skill jobs is strongly driven by technology adoption and, also, that it is a strong predictor of the expansion of low-skill service employment. These results are not specific to large metropolitan areas, and are robust to various controls and instrumental variables that account for long-term industry specialisation. We also find a positive, albeit small, local multiplier effect of high-skilled workers on the demand for non-tradable service jobs.
    Keywords: Local labor market, Polarization, Multiplier
    JEL: J23 J24 R23
    Date: 2016–11
  7. By: Yana Borissenko; Ron Boschma
    Abstract: The Entrepreneurial Ecosystem (EE) literature has attracted much attention, especially in policy circles. However, the concept suffers from a number of shortcomings: (1) it lacks a clear analytical framework that makes explicit what is cause and what is effect in an entrepreneurial system; (2) while being a systemic concept, the EE has not yet fully exploited insights from network theory, and it is not always clear in what way the proposed elements are connected in an entrepreneurial system; (3) it remains a challenge what institutions (and at what spatial scale) impact on the structure and performance of EE; (4) studies have often focused on the EE in single regions or clusters, but lack a comparative and multi-scalar perspective; (5) the EE literature tends to provide a static framework taking a snapshot of EE without considering systematically their evolution over time. For each of these shortcomings, we make a number of suggestions to take up in future research on EE.
    Keywords: Entrepreneurial ecosystem, Entrepreneurial system, Networks, Entrepreneurship, Clusters
    JEL: L26 M21 O33
    Date: 2016–11
  8. By: Poot, Jacques (University of Waikato); Alimi, Omoniyi (University of Waikato); Cameron, Michael P. (University of Waikato); Maré, Dave C. (Motu Economic and Public Policy Research Trust)
    Abstract: For at least half a century, and building on observations first made a century earlier, the gravity model has been the most commonly‐used paradigm for understanding gross migration flows between regions. This model owes its success to, firstly, its intuitive consistency with migration theories; secondly, ease of estimation in its simplest form; and, thirdly, goodness of fit in most applications. While fitting gravity models of aggregate migration flows started taking backstage to microdata analysis in the 1980s, a recent comeback has resulted from increasing applications to international migration and from the emergence of statistical theories appropriate for studying spatial interaction. In this paper we review the status quo and argue for greater integration of internal and international migration modelling. Additionally we revisit the issues of parameter stability and distance deterrence measurement by means of a New Zealand case study. We argue that gravity modelling of migration has a promising future in a multi‐regional stochastic population projection system – an area in which the model has been to date surprisingly underutilised. We conclude with outlining current challenges and opportunities in this field.
    Keywords: gravity model, internal migration, international migration, population projection
    JEL: F22 J61 R23
    Date: 2016–10
  9. By: Javier Changoluisa (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We investigate the relationship between new business formation and the level of competitive pressure perceived by manufacturing incumbent establishments. The perceived pressure of competition is stronger the higher the level of entries in the respective industry. This relationship holds not only for start-ups located in the same region of the incumbent, but also for start-ups across all regions of Germany. The productivity level of an incumbent moderates the extent of the perceived competitive pressure from start-ups. Highly productive incumbents are less threatened by new business formation. Such a moderating effect cannot be found for incumbent size and regional population density.
    Keywords: New business formation, competitive pressure, regional competition, incumbent firms, manufacturing industries
    JEL: L26 L60 D20 O12 R11
    Date: 2016–11–14
  10. By: Daniel Sanchez-Serra
    Abstract: This paper applies the OECD-EU methodology to identify the functional urban areas (FUAs) in Colombia. Using the municipal boundaries, population grid data and inter-municipalities commuting flows from the 2005 population census, the paper identifies 53 FUAs accounting for 27 million people, or 63% of the national population. The resulting FUAs are then compared with the existing national definition (Misión del Sistema de Ciudades) and the legally constituted metropolitan areas in Colombia. Finally, using the OECD-EU methodology already applied to OECD countries, the eight largest FUAs in Colombia are compared with the 281 largest FUA in OECD countries, through a set of economic, social and environmental indicators. The application of the OECD-EU methodology allows to identify the whole system of urban areas in Colombia, with the same criterion; it thus provides a complementary tool to the national and city government to better plan and design future urban policy strategies. For example, this paper finds that metropolitan areas in Colombia have smaller commuting areas relative to OECD average and that improvements in the transport infrastructure may strengthen the economic integration of Colombian metropolitan areas.
    Keywords: GIS, metropolitan areas
    JEL: R12 R23
    Date: 2016–11–15

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